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While small businesses are the lifeblood of the global economy they definitely face their fair share of challenges, particularly when it comes to small business funding.

A lot of new entrepreneurs just aren’t used to handling this kind of cash flow, aren’t sure of how to cover taxes or payroll, and find wrangling with the intricacies of small business financing on a day-to-day basis – as well as big picture – to be a bit of an uphill challenge.

Sadly, oftentimes the small business funding problems cripple or even close businesses before they have a chance to get squared away.

According to the US Small Business Administration 30% of all businesses fail because they run out of money. Traditional lenders aren’t all that friendly to small businesses, either, only approving around 26.9% of all small business loans that are applied for.

Worse, 45% of all small business owners are unaware of the fact that they have a business credit score and aren’t taking advantage of funding options or packages that may be available to them.

To help you sort out your own funding and to hit the ground running with financing packages that makes sense for your business we’ve put together this quick guide.

Let’s dig right in!

Sneak Peak at the Top Funding Options for small business Available

For starters, it’s critical to know that you are going to have a whole host of funding options available to you as a small business owner – including options you may not have even known existed to begin with.

As a quick overview, these are just some of the funding solutions you might choose to leverage moving forward:

•           Traditional Loans

•           SBA Lending Packages

•           Business Lines of Credit

•           Business Credit Cards

•           Equipment Financing Options

•           Invoice Financing Packages

•           Short Term Loan Packages

Below we are going to go little deeper into everything that these financing solutions have to offer you as a smart and savvy this owner today.

Starting Your Search Right

The overwhelming majority of small business owners that seek out funding for their operation are going to do so when they “just feel like they need to” – which may or may not be the right move to make.

Obviously, as an entrepreneur with your finger on the pulse of your business you’ll have a good idea of when financing is needed. But there’s a lot of leverage in choosing the right financing packages for your business ahead of time (before you really need them) to make sure that you can capitalize on time sensitive or surprise opportunities.

Almost never too early to begin searching for financing options and getting all of your ducks in a row, so to speak.

Breaking Down Debt vs Equity Funding

While there are a myriad of small business funding and financing options available (as we highlighted above and will dive deeper into below), everything available kind of breaks down into two different groups – debt funding versus equity funding options.

Choosing the right solution for your needs is a big piece of the puzzle.

Debt Funding

Debt funding for your small business basically works the same way that traditional loans do, in that you take on debt to finance your operation – borrowing money and agreeing to repay it (plus interest) over a very specific block of time.

For the overwhelming majority of small business owners this is the right way to go. Debt funding options for small businesses are usually available for most kinds of businesses, entrepreneurs with average credit, and many of these options can even be taken advantage of online.

Equity Funding

Equity funding, on the other hand, is a way to boost your cash flow and get any injection of capital by selling off ownership of your company. You basically take on investors, give them a portion of your ownership (as well as some control), and in return you get the capital you need.

These kinds of options are not ideal for small business owners, particularly since the biggest and most influential investors in this line of work aren’t going to be looking to offer this kind of funding for anything they don’t see as a homerun hit potentially worth millions and millions of dollars.

You also give up a lot of control and a lot of ownership of your company and should you turn your business into something really big that can end up costing you millions (if not more).

Choosing Your Small Business Funding Options

Regardless of how you go about leveraging small business funding options, choosing the financing packages you pick for your business will come down to a variety of different factors.

These factors include (but aren’t limited to)

• Your industry and whether or not there is a predisposition to offering one kind of financing package or another to businesses in this industry
• The network that you have access to, particularly when it comes to connections with influential investors or lending institutions
• The specific amount of funding that you are looking to take advantage of to begin with
• The timeline that you are looking to receive funding on as well as the timeline you have for repayments
• The overall amount of control you want to keep exerting on your business, today, tomorrow, and years into the future

… And that’s just the tip of the iceberg.

You really need to think about how you want to proceed when it comes time to get small business funding, and you need to take both a short-term and a long-term approach before you jump right in.

This is often going to be a high stress and anxiety ridden decision to be sure, but or time and space you have – and the more options you consider – to make the right decision for your business the better off you are going to be.

Highlighting Debt Business Funding Options

Traditional Loans

Traditional small business loans are the easiest to understand, in that they are so similar to consumer style loan (car loans, personal loans, etc.) that the odds are pretty good that you’ve already taken advantage of similar lending packages in the past.

These kinds of low are great for business owners that want to maintain a lot of ownership, don’t want to give up any equity, and are looking to borrow money over a longer block of time but want to manage their monthly repayment schedule as well.

SBA Lending Packages

The US SBA is very friendly when it comes to offering small businesses long-term, low cost loans and financing packages – but the process of getting your hands on these lending packages can be a bit more involved than a lot of people realize at first.

Borrowers are going to need to have rock solid credit before they begin the application process, will have to have owned their business for at least a year already, and are actually going to have to go through traditional lenders to get the financing they are after – though the US SBA does guarantee these loans through the lender, which makes getting them a whole lot easier.

Anticipate a mile of paperwork to fill out before you get approval as well as a long and drawn out application process.

Business Lines of Credit

Business lines of credit are maybe the most versatile and flexible of all the different small business funding packages out there, giving you a lot of opportunity to use cash and capital to build and grow your business as you see fit without a lot of distractions on how you use that money.

Any business that has unpredictable or you regular cash flow, seasonal capital, or just want a lot of flexibility to do what they need to on a spontaneous basis – shifting gears when new opportunities arise or change – should look into these kinds of lending packages.

Business Credit Cards

There isn’t a lot of surprise to the way that business credit cards work.

You’re talking about the same kind of plastic you likely have in your pocket already, though the terms, limits, and interest rates are almost always going to be quite a bit different than the plastic you’re using in your personal life.

Business owners that do not need a pile of capital to work through when it comes to small business funding, do not need immediate access to giant reserves of cash, and are comfortable using faster to pay for business expenses and the like are really going to find these kinds of offers attractive.

It’s never a bad idea to look for business credit cards that offer some sort of reward system, either. With the kinds of dollar figures that run through these types of cards you can begin to rack up points and benefits in a hurry.

Equipment Financing Packages

Equipment financing packages are great for small businesses that have equipment on hand and other assets that can be leveraged for financing, helping you to purchase the equipment and materials you need to upgrade or overhaul your business while securing loans through the assets you already have on hand.

Kinds of financing packages for businesses can be a little bit restrictive in how they are used, however. You’ll need to drill down into the ins and outs of your specific arrangements before you pull the trigger on this kind of move.

Different offers will have different restrictions attached to them so be sure that you are really sure of what you’re getting into the for you sign on the dotted line.

Invoice Financing Packages

One of the biggest challenges you’ll have as a small business owner is waiting around for your clients to actually pay you after they have been invoiced – a challenge that every small business on the planet is going to have to wrestle with far more often than they’d like.

Invoice financing small business funding packages can help you leverage those unpaid invoices to get cash and capital that you need ASAP, using the actual invoices themselves as collateral and getting in advance on those invoices to keep your cash flow a lot more consistent.

One of the big benefits here is that any business with invoices can take advantage of these kinds of lending packages regardless of their credit score, credit history, or overall credit worthiness. The invoices themselves are more than enough to get the ball rolling, giving you an opportunity to use financing packages even if you thought traditional opportunities were closed off.

Short Term Loan Packages

If you are on the hunt for cash and capital quickly you can expect to pay a premium to take advantage of these kinds of lending services.

Short-term loans kind of sit in that sweet spot between speed and overall cost, giving small business owners an opportunity to get their hands on the money they need when they need it most without having to mortgage their future financial situations along the way.

These kinds of loans are very flexible, offer almost instant payouts, and are usually pretty affordable – basically acting like a condensed down version of more traditional term loan packages like the ones we made mention of earlier.

Getting Creative with Your Funding Options

Creative small business funding options are available as well and you shouldn’t overlook them, even if they don’t appear to be quite as “old-school” as more traditional lending services we’ve already discussed.

Small business funding grants are a great way to get a lot of cash and capital you wouldn’t have had access to otherwise, but you’ll need to set aside plenty of time to apply for them and go through the entire (often grueling) grant process to land the capital they provide.

Crowdfunding solutions are becoming really viable these days, already one of the most popular channels for small business funding for startups and new entrepreneurs that are tech savvy. This is another approach you might want to go down if you’re willing to take on the risk that it entails.

Finally, you can always reach out to your personal network (your friends and family members) that may be willing to help you make your entrepreneurial dreams come true.

It can be a bit risky to mix business and family or other important relationships, but plenty of people have been able to make it work – and have credited these kinds of lending services with allowing them to make their financial future a reality.

Closing Thoughts

At the end of the day, there’s no simple formula for calculating exactly how you should approach small business funding for your specific needs.

You’ll instead have to really assess where you are as a business, what your cash flow situation is, the needs you have to take care of with this financing, and the flexibility of not only how you can use the funding but how you can go about repaying the loans moving forward.

Hopefully we’ve been able to shine a little bit of light on the best small business funding options available today and have helped you make the right choices for your business going forward!

Do you know which you should choose, W2 vs. 1099?

Employee vs independent contractor? Does just thinking about the choice make your head spin? Don’t worry, we’ve got you covered. 

In some ways, business was easier when it was just you. 

Growth is a good thing and it means your business is going places. 

However, there are a lot of technical and administrative headaches you have to deal with along the way. One of those things is figuring out how to categorize the people who are working for you. 

It was once much easier to figure this out. Virtually all employees were paid on W2s. Done and done.

But times have changed, and now it’s much more common to hire remote employees and freelancers for various business duties such as marketing, outreach, SEO, and even for basic secretarial jobs such as managing email and creating spreadsheets. 

This has made it much harder to know whether those you have working for you should be 1099 independent contractors or more traditional W2 employees.

So, what is the difference? Which type of worker is a better fit for your business? And of those new employees you’re taking on now, how do you know if you should be providing them a 1099/W-9 or a W-2 form?

In this guide, we’ll talk about all of that and more. We’ll be covering:

• What is the difference between a 1099 vs. W2 employee?
• Which is a better fit for your business? 
• Pros and cons of both
• How do you know if an employee should be 1099 vs. W2? 
• And what forms do you need for each?

Choosing whether to center your business around utilizing independent contractors or traditional employees (or a mix) is an important decision that affects not only your business process but your financial model. 

So, it’s important to take the time to consider which is best for you. 

What is the difference between a 1099 vs. W2 employee?

To clear up any confusion, the first thing to understand about 1099 vs. W2 is that it’s strictly a matter of tax classification. 

In fact, 1099 and W2 refer simply to different tax forms, a 1099 employee being one paid on 1099 (typically, a 1099-MISC form) and a W2 employee one which is paid on a W2.

However, what makes an employee 1099 or W2 is what is important. And that’s what we’ll be talking about in this section. 

Not only because each type of worker operates differently, and that affects your business in several ways, but also because failing to classify your employees correctly can lead to tax fines and other fees.

Let’s start with breaking down the basic differences between a worker or employee on 1099 vs. one which should be paid on W2.

What is a 1099 worker?

Technically, a 1099 employee isn’t an employee at all, but an independent contractor. A 1099 worker typically provides a service to your company in exchange for payment.

The most commonly seen 1099 worker is likely your typical accountant. 

Accountants sometimes work for a single client, but often they have several different clients. They either spend only a portion of their week in the office of each client– handling payroll, etc.– or work from their own office full-time depending on what they’re hired to do. 

This is by no means the only example of a 1099 contractor, though. A freelance webmaster could also perform work for you on a contract, for example.

Independent contractors tend to be hired for a specific period of time to do a particular job. However, as we just talked about in the case of an accountant or webmaster, that’s not necessarily the case. 

Because independent contractors are independent, they may also have their own team who help them complete whatever job they’re hired to help you with. 

Defining characteristics of a 1099 worker:

• A 1099 independent contractor controls how the work will be done. If you as the employer controls not only the result but also what will be done and how, that worker is an employee. 
• A 1099 independent contractor pays all their own taxes, including self-employment taxes. You’re not responsible for paying taxes with 1099 contractors. 
• A 1099 independent contractor can’t work a traditional 9-5 shift. They also often complete their work in their own place of business (i.e. remotely). 
• A 1099 independent contractor is not eligible for employer benefits. Just as 1099 contractors pay their own taxes as self-employed people, they also must pay for their own employer benefits as business owners. 

What is a W2 employee?

A W2 worker is the traditional employee you typically think of in the case of any business. 

A W2 worker is a salaried employee who collects employer benefits such as health insurance and retirement and works a typical 9-5 shift. They work for your company and are given a wage dictated by you (in accordance with your state’s minimum wage laws). 

Unlike 1099 contractors, you’re responsible as an employer to withhold your W2 worker’s state and federal employer taxes, Medicare, and Social Security. 

You’re also responsible for providing them the supplies they’ll need to do their job, be it office supplies, equipment, or various tools. 

In the case of a 1099 contractor, the work they do for you is decided based on a contractor and you, having signed that contract, must work with that contractor based on that agreement.

However, in the case of a W2 worker, it is your right to let go of any employee based on any one of several valid reasons such as performance, fraud, or a failure to appear. 

Defining characteristics of a W2 employee:

• A W2 employee is a salaried employee who works for you. You dictate not only the results of their work but how they perform that work. 
• A W2 employee has all their tax payments withheld by their employer. You as their employer withhold Medicare, Social Security, and state and federal employment taxes.
• A W2 employee can be let go for poor performance or other reasons. They do not work and collect payment based on a contractor like 1099 workers but are employed by your company and can be let go for valid reasons.

1099 vs. W2: Which is a better fit for your business? 

Now that you understand clearly the difference between a 1099 independent contractor and a W2 employee, it’s time to start thinking about which is a better fit for your business.

More than ever, many types of businesses are operating entirely online. 

In that case, it may make sense to utilize mostly 1099 workers on a regular basis while others for specific projects and only have a few regular employees (if any). That way, you save on taxes, supplies, and office space

However, your business may require more direct communication, retail space, or something else that is more conducive to typical on-location W2 employees, so what is best for you depends on several factors. 

Here are the pros and cons of 1099 and W2 employees: 

1099 Pros and cons

The primary benefit of 1099 workers is their reduced cost, but there are downsides to independent contractors as well. 

Let’s look more closely at the pros and cons of 1099 independent contractors:

1099 Pros

• You don’t have to pay unemployment insurance: Because 1099 workers aren’t employed by you, if you “fire” an independent contractor, they can’t collect unemployment. This is a big expense as it typically amounts to 10% of an employee’s salary. However, keep in mind that there is a caveat to this if you have a mix of W2 and 1099: in many states, such as California, if you have a single ex-employee on unemployment you have to pay the full unemployment insurance amount. 
• You don’t have to pay income or payroll taxes on behalf of your 1099 workers: You’re not responsible for paying taxes on behalf of 1099 contractors, including state, federal, Medicare, Social Security, or payroll taxes.
• A 1099 independent contractor doesn’t get employer benefits. Just as 1099 contractors pay their own taxes as self-employed people, they also must pay for their own benefits as business owners, meaning savings for you. 
• Easier to hire specialized expertise for a limited period of time: Sometimes, you need a task done for a specific period of time or a single project, so you don’t need another full-time employee. An independent contractor is designed for this, as you can make a contract for one, they complete the work, and then you’re done, helping you save more time and money while getting someone that likely has more experience with the task as well.
• Reduced legal risk: Because independent contractors are not true employees, they don’t qualify for workers compensation and can’t file a wrongful termination claim in most cases. 

1099 Cons

• They’re less committed and less familiar with your company: There’s a special kind of dependability that you get with W2 employees that you often don’t get with independent contractors. After all, they don’t work in the office throughout each day and aren’t entrenched in the daily goings-on of the business. 
• They’re specialized: As we talked about, an independent contractor is likely an expert in their field, but that’s all they offer. A 1099 contractor can’t and likely won’t shift gears for you because they only offer whatever their services are. 

W2 Pros and cons

Like 1099 independent contractors, W2 employees also have their unique pros and cons. Here are the most notable: 

W2 Pros

• They’re more dependable, being on-location “9-5”: Your business hours may be different from the typical 9-5, but the point still stands– W2 employees are more dependable because they’re in the office all the time. Independent contractors can, at times and depending on the person, be hard to get a hold of when you need them. They’re also less familiar with your business and brand. 
• They’re more committed: W2 employees don’t consider you a “client” of theirs like independent contractors typically do. You’re their employee, typically their only employee, so they’re much more committed to you than a 1099 worker will typically be to your company. 
• They can shift gears and help take duties off your back: Independent contractors are designed to offer their specific services and that’s it. However, a long-term employee can be trained to take on many different roles and duties over time, even helping take certain things off your back over time as well. 

W2 Cons

• W2 employees cost more than independent contractors: In exchange for the dependability, commitment, and familiarity you get with in-office employees, they do typically cost more. With W2 employees, you need to pay income taxes, unemployment insurance, and benefits among other things. 
• They’re typically less specialized, therefore not as well suited for certain tasks: W2 employees aren’t typically specialists. This isn’t always the case, but independent contractors are often experts in their field, so they may be better suited for certain tasks. 

When to choose W2 vs. 1099? 

There’s a lot that goes into choosing between W2 employees vs. 1099 contractors (and when, because every job your business needs done is different). 

For that reason, it may not yet be clear which you should choose for a certain situation. 

As you can tell from the pros and cons above, it all depends on what you need. 

If you own a tech company and want to be able to handle more clients, you’ll probably need a W2 employee who can work with you to split appointments and complete jobs. 

A retail business is the same deal, you need people that are there from open to close to help you run the business.

However, if what you need is someone who is an expert to complete a big job, such as setting up a server in your office, market your service online, or complete your bi-weekly payroll, a 1099 independent contractor might be a better fit. 

These are just a few examples, but hopefully, they paint a clearer picture of the kind of situations where you would choose one vs. the other. 

Sometimes, you’ll want someone on W2 to help you handle the daily workload and take on some of the tasks you have to do in the shop each day. Other times, you might need someone to help fix up the storefront, ideal for a 1099 contractor. 

How do you know if an employee should be 1099 vs. W2 ?  

What if you already have an employee, someone new, whom you’ve hired to handle certain things around the business, and you aren’t yet sure what they classify as? 

It’s important to know how to classify someone doing work for your business. To wrongly classify an employee who should be W2 as 1099 (perhaps in an effort to avoid paying for insurance or taxes) could mean steep fines and penalties from the IRS, so you don’t want to mess around. 

So, 1099 vs. W2 , which is better for your new employee? Let’s look at what Uncle Sam says on the matter.

According to the IRS, there are two points for you as a business owner to keep in mind when figuring out how to classify your workers: 

1. Control. The relationship between a worker and a business is important. If the business controls what work is accomplished and directs how it is done, it exerts behavioral control. If the business directs or controls financial and certain relevant aspects of a worker’s job, it exercises financial control. This includes:

   • The extent of the worker’s investment in the facilities or tools used in performing services
   • The extent to which the worker makes his or her services available to the relevant market
   • How the business pays the worker, and
   • The extent to which the worker can realize a profit or incur a loss

2. Relationship. How the employer and worker perceive their relationship is also important for determining worker status. Key topics to think about include:

   • Written contracts describing the relationship the parties intended to create
   • Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation or sick pay
   • The permanency of the relationship, and
   • The extent to which services performed by the worker are a key aspect of the regular business of the company
   • The extent to which the worker has unreimbursed business expenses

Ultimately, it comes down to how much control you have over the work and the way in which you work (the working relationship). With these IRS-suggested pointers, it becomes much clearer how to classify a worker as either a 1099 vs. W2 employee. 

Still stumped? Fortunately, The IRS has a handy resource, Form SS-8, which you can fill out and send to the IRS to find out exactly how the IRS would classify that worker. 

1099 or W2 employee: What forms do you need?

Now that you’re clear on the difference between employees working on W2 vs. 1099 independent contractors, let’s take a moment to dive into their respective tax forms: the W-2 and W-9 (the latter for 1099s).

Form W-9 (for 1099)

The W-9 form is provided to independent contractors who have completed work for you in the previous tax year:

Keep in mind, in the case of 1099 workers only, you or your accountant is required to mail a copy of that worker’s 1099 form at the end of the year which shows the worker’s income for the year. 

For more information on the W-9 form, see irs.gov/forms-pubs/about-form-w-9.

Form W-2

Form W-2, as the name suggests, is for W2 employees who work either part or full-time at your business:

The form is a bit simpler than the W-9 and one which most are much more familiar with given that any typical job provides you with this at the end of the year, as opposed to the W-9. 

How do you know if you need to provide a W-2 to an employee?

According to the IRS, “Every employer engaged in a trade or business who pays remuneration, including non-cash payments of $600 or more for the year (all amounts if any income, social security, or Medicare tax was withheld) for services performed by an employee must file a Form W-2 for each employee (even if the employee is related to the employer) from whom:

• Income, social security, or Medicare tax was withheld.
• Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Allowance Certificate.”

For more information on the W-2 form, see irs.gov/forms-pubs/about-form-w-2.

Is W2 or 1099 a better fit for your business?

Choosing between hiring someone as a traditional W2 employee vs. 1099 independent contractor may or may not be an easy decision. But it’s always an important one and a decision that’s within your control to make. 

How you choose to hire the team that works with you to build your business will affect many important aspects of your business, so take the time to make sure you’re making the choice that best fits you in every position.

You might find that you need a small office staff to answer customer communications or develop your product that are employed on W2 while you can hire several independent contractors outside the office for everything from marketing to accounting. 

Ultimately, the choice is yours. Weight the facts of each and remember that you can choose which positions are traditional W2 employees and which are better suited as 1099 workers. 

Whether you’re asking for a bank loan or applying for a credit card, the most important thing to consider is the APR. You will recognize it as the number expressed as a percentage that will basically indicate how much extra you will have to pay back to the lender. The problem is that many people tend to confuse APR with interest rate, thinking they are exactly the same, and this can cause problems down the road. To protect yourself from unexpected surprises, learn exactly what APR is, what types there are and how it is calculated.

What exactly is APR?

APR stands for annual percentage rate, and by definition it refers to the cost of borrowing money for example through a small business loan,  personal loan or credit card. Besides borrowing, the amount earned from an investment in a year is also referred to as APR, such as the returns from an ETF, stock, etc. In the case of a loan, the APR will always be higher than the interest rate because it includes all the costs incurred by the loan from the lender. Meanwhile, the interest rate is only the cost of borrowing the principal loan amount without accounting for the other costs.

All these are additional costs not covered by the interest rate of the loan but still worth considering. Therefore, compared to only the interest rate, APR is a much more reliable measure of how much a loan will actually cost you so that you can effectively compare different lenders. For instance, two lenders may have the same interest rate but they will differ in the other charges.

Some of the costs commonly included in a loan include:

• loan application fee
• loan processing fee
• underwriting fee
• document preparation fee

These are common loan fees across the many types of financing made available, but there are others sometimes added by some lenders. Those you may come across in your application may be:

• credit report
• attorney fee
• abstract fee
• transfer taxes
• title fee

APR and TILA

Even the law acknowledges the importance of APR in lending, which is why it was mandated by the Truth in Lending Act (TILA). This legislation was passed in 1968 in order to ensure that borrowers were treated fairly when receiving credit and loans from lenders. It was also meant to create a standardized manner in which the cost of borrowing would be represented so that borrowers could be more informed about what they were getting into.

However, TILA does not dictate what charges lenders can charge because they are still free to set their own rates; the law only requires that lenders be open about their charges. To enforce TILA, the Federal Deposit Insurance Corporation (FDIC) is responsible for ensuring lenders are adhering to the law. The FDIC ensures that all loans are following the law in terms of periodic rates, finance charges, tolerance and good faith reliance. Fortunately, you don’t have to bother yourself with the details as you can trust FDIC to keep an eye on the financial institutions.

For two decades since the inception of the law in 1968, it was very effective in keeping lenders honest. Then in the 1980s some lenders, especially auto manufacturers, took advantage of a loophole in TILA. These lenders take advantage of the fact that ‘amount financed’ and ‘finance charges’ were not totally differentiated. For this reason, they were able to completely get rid of the finance charges by transferring it all to the ‘amount financed’ category.

Thus, lenders were able to claim they provide zero APR financing and now borrowers were able to receive interest free loans. For instance, some auto lenders who provide these zero APR financing and not charge any interest whatsoever will also require a charge a $1,000 rebate. Because the lenders can set their own charges by taking advantage of the loophole, the amount charged as rebate can be higher or lower than APR.

Tila Regulation Changes

Since TILA was passed in 1968, there have been very many amendments to the legislation. Some of the most important changes include the CARD Act of 2009. This amendment targeted credit card issuers by requiring them to disclose important information to anyone that applied for a credit card and to provide a notice before raising interest rates. By 2015, the Consumer Financial Protection Bureau (CFPB) reported that this amendment had saved consumers $16 billion – $7 billion in late fees and $9 billion in over-the-limit fees.

The bad news, though, is that zero percent APR financing is still being offered by some lenders, and this can sometimes take advantage of the borrowers who are unable to receive funding from conventional sources.

What are the types of Annual Percentage Rates?

When borrowing money or using a credit card, most people focus on one form of APR. This is not a problem when asking for a bank loan, but credit cards have varying types of APR that you should be aware of. The most obvious is the purchase APR, which is charged whenever you use your credit card to purchase goods and services. If you happen to violate any of the terms set out in the agreement with the credit card provider such as being late on the payments, a different APR will be applied – penalty APR. Since this is charged after a violation, the APR is usually higher than the purchase APR. Then there is a different APR charged when you use a credit card to borrow money either by cash, check or transfer to another credit card. The APR here is also much higher than the purchase APR and there are often no grace periods on repayment.

That being said, another common form of APR you are most likely to encounter is the promotional APR. Some lenders will also refer to it as an introductory APR, but they both refer to a lower APR offered by a credit card issuer to entice you to take the credit card. The terms of the promotional APR will vary, but they can be as attractive as zero percent APR or, more commonly, a reduced APR.

When considering this form of APR, it is important to remember two factors – length and limits. In most cases, the promotional APR only lasts for a limited time between six months and a year. Once this period is over, the APR will automatically adjust upwards to the standard APR from the lender. Banks and issuers will also impose limits to the types of transactions that would enjoy this lower APR. For instance, a lender may only give promotional APR for purchases but not cash advances or transfers. All these ought to be specified in the fine print, and it is important to be aware of what you are getting into.

Although there are several types of APR as described above, they all fall into two categories – variable and fixed.

How do variable and fixed APRs compare?

From the names, you should already be able to deduce how these two types of APR differ. The fixed APR, also called non-variable APR, is that where the APR does not change throughout the length of the lending relationship. For a bank loan, this means that the rate stays the same until the entire loan is paid back. For a credit card, this means you can enjoy the same rate indefinitely. The benefit of a fixed APR is that there are no surprises and one is thus able to plan their expenses all the way. Despite claiming to provide a fixed APR, some credit card will add some exceptions that would allow them to change the APR based on factors such as market conditions or depending on your usage. To confirm that you are dealing with a truly non-variable APR, take some time to read through the fine print  in detail.

On the other hand, a variable APR is open to change depending on any factor the lender deems relevant. Of course, the good news is that they aren’t allowed to do this without adequate reason so there is no need to be wary. These lenders therefore use the prime rate as a reference to changing the APR. The prime rate is an interest rate determined by the federal funds rate and the bank’s overnight rate. To find the variable APR, this prime rate is added to the margin the bank issues to find a final figure. Banks use this prime rate to calculate various loans including bank loans and even credit cards.

TILA also dictates how lenders can change their APR so as not to inconvenience their clients. First, credit card issuers must notify their clients that they are changing the APR 45 days prior to doing so. Second, 21 days must be given as a grace period from the time a monthly statement is given to the due date. Finally, a company must assess if the borrower has the ability to pay back the loan before they can offer them financing.

Why Is Fixed Rate APR better compared to Variable Rate APR?

Inasmuch as there are risks to using variable APR, it does have some benefits. The most important is that an individual can get to enjoy lower rates in certain market conditions. Recently, the Federal Reserve cut interest rates by 25 basis points, which means lower prime rates and subsequently lower APR. That being said, lenders also take into account delinquency rates to estimate the risk in providing funding. The Federal Reserve Bank of St. Louis recently reported 2.59% in delinquency rates last seen in 2013, and this means higher risk for commercial banks and higher APR.

These and more measures determine the variable APR at any point in time. Most banks and credit card issuers prefer to use the variable rate because it protects them from changing market conditions. That also means lenders have to be prepared for unexpected conditions at any time. It is also important to remember that you can always get a lower APR if you have a higher credit score.

Some lenders will also have a tiered APR where the APR varies depending on the category of debt. As an example, a credit card issuer may charge a lower APR of 4% for debts below $1,000 and raise this to 7% once the debt exceeds $1,000. Again, these APRs could either be variable or fixed but the terms follow a different structure.

How to Calculate APR

There are several ways to calculate APR before you take any loan and know how much you will have to pay at the end of it. To get the exact figures, you will first need to find the interest rate charged, how much you are borrowing, the term of the loan and any other fees. Next you will have to determine what kind of loan you are taking because some like payday loans have a one-time repayment and others like a mortgage or bank loan are compounded every month.

To calculate the APR for an installment loan, you will need to find out the loan amount, loan term and the monthly payment. Let’s take a case of a $10,000 loan to be repaid in 5 years through $250 monthly payments.

1. Calculate the total amount to be paid back – $250 * (5 * 12) = $15,000
2. Calculate the interest paid – $15,000 – $10,000 = $5,000
3. Divide the interest by the number of years – $5,000 / 5 = $1,000
4. Divide the annual interest by total amount paid – $1,000 / $15,000 = 0.066
5. Multiply by 100% to find the percentage rate – 0.066 * 100 = 6.6%

For calculating the APR on a credit card, the formula is – (1+[i/q])q-1

Here, ‘i’ is the annual interest rate and ‘q’ is the number of times you pay in a year. If the interest charged by the credit card issuer is 18% and payments are made monthly, the APR would be:

(1+[0.18/12])12-1 = 0.195 = 19.5%

In both illustrations above, the additional costs involved in the loan have not been included, but there are often costs associated that have to be considered. Doing this makes the calculation a lot more tricky, but with the Google spreadsheets you can quickly discover the APR or any loan. The formula begins with finding the monthly payments using the PMT function. PMT represents annuity payments and it can be used in any spreadsheet application:

=PMT (interest rate/months, total number of months you pay on the loan, loan value plus fees)

Assume an individual borrows a $10,000 loan at an interest rate of 12% to be paid back in two years plus a $500 closing fee to the bank. Here, the monthly payments would be:

=PMT (.12/12, 24, 10500)

Monthly payments would be $494. 27. With this, you can now get the APR using the function:

=RATE (total number of months you pay on the loan, your monthly payment expressed as a negative, the current value of your loan)

=RATE (24, -494.27, 10000)

The monthly rate is now found to be 0.0141 and this is multiplied by 12 to get the annual rate of  0.1692. Now multiply this number by 100 to get the percentage figure of 16.92%, which is the APR.

From these calculations, you can now see that the APR is higher than the interest rate that was issued as 12% by the credit card provider at the time of application for the loan.

Apart from using spreadsheets, an even easier way of figuring out the APR is through one of various online calculators. These automatically give you the APR from only the principle amount, interest rate, charges and loan term.

How effective is APR?

Back in 1968 when legislators declared that APR would be the standard representation of charges, they did so to make things more convenient for borrowers. Nonetheless, they did not consider some of the limitations of using APR to calculate the actual costs incurred when borrowing money. For starters, there is no clear definition of which fees should be included in the APR and which ones left out. Due to this, lenders can pick those fees they would prefer to include in their APR and thus they can alter the APR to suit their needs.

Additionally, some costs incurred may fail to be considered in calculating APR such as fees for late payments. The lenders think of these as separate from the rest, but some borrowers may disagree. For these reasons, anyone borrowing from these lenders would have to calculate the APR on their own to determine the actual APR they are paying. Financial experts have come to believe that APR would be best used for long-term loans of, say, 30 years instead of short-term loans of 3 to 5 years.

That being said, APR is not completely worthless because it still does give a borrower an idea of how much they will be paying in total. Add to that, the APR is effective when comparing loan offers from different lenders just as the legislators intended more than 5 decades ago.

Many online businesses fail to grow and become profitable not for the lack of marketing, but in failing to convert potential customers into paying customers. There are many ways for a business to increase its sales and, subsequently, its profitability, but one of the most common methods of visualizing this process is through the marketing and sales funnel. ClickFunnels is a tool that makes use of the marketing and sales funnel to help any business to improve how they market and sell their products online.

When most people think of an online business, they think it is only about creating a website and starting to sell right away. In reality, it takes a lot of effort take a customer through a process from marketing all the way to the point they make a purchase. If you make the mistake of losing a customer’s attention at any point during the process, then they may leave your website. Therefore, it is very important to make the process easy to follow, and this is done through the funnel.

What is a marketing and sales funnel?

Any entrepreneur who has been interested in growing their business may have already stumbled upon the cone-shaped funnel. It is a visual representation of the process through which a business markets their products to new customers and eventually convert them into actual customers. The conical shape also illustrates how one cannot convert all of the potential customers but the number decreases down the funnel. There are 5 steps involved in any sales funnel, and these are:

1. Awareness

In the first step of the process, you get to introduce your company and products to potential customers. You can do this by sending marketing emails, advertising your website/blog or even through social media. At this point the customers don’t know a thing about you or your business, but it is also the time when you introduce yourself. To make a positive impact on their minds, you will need to present yourself as a thought leader in the industry to get them interested in your products or services.

Considering that those who you market to don’t know the value of your products and services, it is not advised to immediately try and sell to them. If you do, then your advert will seem more like a sales call and potential customers are more likely to skip through. Instead, try to demonstrate what you have to offer that will keep them interested in you specifically. A good way of keeping them engaged is to give them a taste of what you can offer.

Let’s take the example of a web developer who would like to gain more customers through a funnel. At the awareness stage, they might offer a 30-day trial for their customers to evaluate the quality of websites. By doing so, you’re already keeping them engaged and discouraging them from the competition, at least for the period of the trial.

2. Consideration

Now that you have already introduced yourself to the client, their interest is peaked and it’s time to strike. This is the time to introduce your products to your client but not yet to sell them. They may be interested, but you can bet they are considering others too. Therefore, you need to set yourself apart by targeting their specific problem. Presumably, you have learned their particular needs by now after being in contact for a while, so you know what they really want.

In our example with the web designer, you may have noticed that the customer’s need is more focused toward e-commerce. To demonstrate how your services would fulfill this need, you can incorporate these features into their trial website. The thinking is that once they see their problem being solved, they will be more likely to stick to what worked.

3. Conversion

Those customers that reach this stage of the funnel are already well educated about your products and they need only to make the purchase. Although they have already seen the value of your products and services, most will still need that final nudge. Here you want to illustrate the benefits of what you offer rather than overwhelming them with more details. Show them why you are the better option compared to the competition and then offer incentives. Some of the best incentives are discounts that make your products/services cheaper than the competition and one-time offers that create a sense of urgency.

4. Loyalty

After descending the funnel in the previous steps, it is clear how difficult it is to convert a potential customer into a paying one. So why would you want to throw all that effort away and start all over again? You wouldn’t, which is why you must continue to keep your paying customers loyal. Even the Harvard Business Review talks about how a company’s profits increase with time if the existing customers stick to them for longer.

To keep your customers loyal, some companies offer special discounts for longer-term purchases. Say, the web developer is paid $50 for maintaining a website for a month, which equates to $600 a year. They might offer a yearly fee of $500, thus saving the customer money for staying loyal. This would incentivize customers to stay loyal for longer and build a lasting relationship.

5. Advocacy

By now, the customer is a huge fan of your work, and they can be turned into marketers. By constantly providing top notch services to them, they will talk about you to their friends and even advertise on social media on your behalf. The best way to do this is by starting a loyalty or affiliate program where they have a real incentive for advertising your products and services.

What does ClickFunnels do?

Creating a sales funnel is not an easy thing to do, especially for a single individual. Just look at the entire process listed above that is involved in the making of a funnel, with so many things to consider. To convert just one paying customer means going through the process of email and social media marketing, responding to their communication, getting them to make that first purchase and then following up thereafter. It would take an entire staff to keep up with just 10 customers who all have different demands, and that is something many entrepreneurs don’t have.

This is where ClickFunnels comes in to cover all the bases needed to make a sales funnel work and actually produce results. ClickFunnels now has over 92,000 users and over 5 million funnels all of which have been able to process about $3.7 billion in sales so far with much more to come. In fact, ClickFunnels is now one of the most popular sales funnel tools available to everyone around the world with some good reasons.

Why is ClickFunnels so popular?

The first advantage ClickFunnels does better than the rest is being usable by everyone regardless of their expertise. First, creating a website is easy through a drag and drop webpage editor that doesn’t take a lot of effort to end up with a good-looking and responsive website. Neither do you have to worry about hosting charges because all those charges are covered too. Furthermore, marketing efforts are all automated by email and through Facebook and payment systems integrated. All these are available from a single dashboard that is easy to use by anyone and that makes the whole process easy.

What’s more is that ClickFunnels has an affiliate program that can increase your sales even further. While ClickFunnels’ own funnels are very effective, word of mouth marketing can significantly increase your reach to customers and thus increase your business’ profits. Under the affiliate program, you don’t pay any upfront fees as you would with other marketing strategies, but only after a sale has been made. This means that you never pay for anything that was not effective.

Affiliates in ClickFunnels promote your products and services so you can reach more clients without taking any more time. When you think about it, it’s like having an entire marketing team that does the work and is paid afterwards. This feature is referred to as backpack and it doesn’t take any more resources because you only pay after a sale has been made.

Any disadvantages to using ClickFunnels?

Some may consider the monthly fee charged for their services as a disadvantage. A subscription to ClickFunnels costs $97 per month, which some people may not be prepared to pay, especially if it is a small startup. Besides, there may be some cheaper options out there, but they obviously don’t have everything offered by ClickFunnels. With all that you get from this company, it’s definitely worth it, but to get more you will need to pay a bit more.

Some of the additional features include Actionetics MD that provides targeted marketing options to customers, but you need to pay more for this upgrade. However, even with the basic features only, ClickFunnels is able to greatly improve your business and help your company grow at a much faster rate.

Ecommerce is booming. It’s estimated that this year there will be a staggering 1.92 billion digital buyers around the world – and that number is only going to grow as time goes on.

It’s no surprise that thousands of budding entrepreneurs continue to launch ecommerce websites with the hope of capturing some of this spectacular growth.  Although ecommerce may seem like it has been around for a long time, it’s still a nascent industry with a lot of room for growth!

In fact, estimates suggest that by 2040, 95% of purchases will be performed via an ecommerce website. Which websites do you think people around the world are going to be using?

They will want the fastest and most performant websites that offer a fast and seamless experience. They will want websites that are built using the absolute best ecommerce platforms.

Here’s a closer look at the best ecommerce platforms to help you launch a stunning website that will give you the best chances of success.

BigCommerce

BigCommerce is a versatile enterprise ecommerce solution that bills itself as the future of ecommerce. The platform aims to lead the new era of ecommerce by taking responsibility for the security and scalability of enterprise operations.

It aims to help businesses accelerate growth rather than complexity while offering robust security and performance. As an open SaaS solution, it offers a world of possibility to enterprise-class organizations.

This level of scale means that it’s not quite as useful for smaller organizations. When it comes to larger businesses, though, the platform is currently used by a wide range of leading brands so it’s certainly got a lot to offer.

It is used across a wide range of industries, too, making the tool even more attractive for certain businesses.

Wix.com

Wix is one of the biggest names in website creation. The website builder offers a powerful what-you-see-is-what-you-get editor that means a person with even the most limited level of knowledge can create a beautiful website.

By empowering domain owners to create the websites that they want, Wix bills itself as the place to create professional websites. The tool also offers a huge range of templates and features, making it easy for website owners to select a range of advanced functionality for their store.

There are a wide variety of pricing features on offer, too, and the online stores are very competitive when compared to those alternatives on offer from competing platforms. In fact, retailers can look forward to getting paid with a variety of methods without having to pay commission on sales.

Woocommerce

Woocommerce is an open source ecommerce platform that is built specifically for WordPress. It is heavily customizable and makes it a breeze for business owners to sell online.

The platform prizes itself on its vast customization abilities. If you really value being able to control your own website and really make it your own, you may find that this is the platform that you’ve been looking for.

Many other users agree, too, and Woocommerce currently powers an incredible 28% of all online stores. This makes it the most popular ecommerce platform on the web and it’s used by a huge range of leading companies.

Those companies choose to work with Woocommerce mostly because it has the ability to support unlimited products, there are a huge range of mobile-friendly templates available, and there are thousands of extensions available. All of this makes the tool incredibly flexible.

The tool is quite complex and developers will be able to tinker with it to get the truly best results possible. With that said, there are a wide range of support teams that are spread across the world. These helpful teams are lauded for their ability to help customers get the best from their platform.

ShoppingCart

This platform is a WordPress theme that bills itself as the next generation in ultra responsive shopping. The theme is easy to customize and site owners can call upon a wide range of components to get their website exactly how they like it.

For those professionals who are familiar with WordPress, too, this might be the natural choice. The fact that it’s a plugin doesn’t detract at all from the functionality and customization options that are on offer – users will find that they can use a range of widgets, menus, logos, color options, and much more.

Of course, the statistics show that people are shopping on mobile devices in greater numbers than ever before – this is why the plugin makes sure that your website looks fantastic whether it’s on desktop, mobile, or a tablet device.

Squarespace

Squarespace was one of the original all-in-one solutions for people looking to create a beautiful website without the difficulties that come with more complex avenues. Everything is covered here including domains, ecommerce, hosting, galleries, analytics, and more.

It’s worth nothing, though, that this big strength also has the potential to become a huge weakness. Some store owners will want to avoid becoming too reliant upon just a single platform for all of their ecommerce needs.

If that isn’t the case, though, many people will be delighted with Squarespace and what it has to offer. They can look forward to using award-winning templates that really do help amateurs to look like experts right from the very beginning. Online stores built with Squarespace look legitimate and inspire customers to browse through and complete their purchases.

Some truly world-class designers have worked on templates that offer a rich product display on the frontend. On the backend, there’s a lot going on: website owners can enjoy automatic inventory management, the ability to sell unlimited products, and powerful shipping calculator features.

This truly is an all-in-one service.

Shopify

Shopify purports that it’s far more than just a piece of ecommerce software. The platform states that it’s also the best ecommerce platform that has everything a business owner could need to sell online, on social media, or in person.

Shopify states that if you have the will to build your business, it has the way. It can help nascent businesses that are just growing and looking to establish themselves on the one hand, while also helping larger enterprises to capitalize upon their existing audience.

The platform does indeed offer more than many of the ecommerce platforms on this list, given that it can also help businesses to sell in-person with point of sale terminals. If you’re going to open a business that is a blend between online and offline business, you might find that Shopify is too good to turn down.

Aside from offering stunning templates and building potential, Shopify can also help business owners to market their business while managing every element of their business including orders, shipping, and payments.

This can all be managed from a centralized platform, giving businesses the insights and knowledge that they need to grow no matter where they are in the world. Lots of apps also integrate directly with Shopify, opening up a world of opportunity.

Shopify really is an exciting platform that has the potential to change ecommerce. if you’re looking for a full solution that can get your business from a-z, you might want to explore this option in more depth.

Weebly

Weebly is a website builder that sticks to the fundamentals. It focuses on giving domain owners the ability to easily create a beautiful store using customizable templates and easy-to-use tools.

The platform boasts that these professional templates can really give people the opportunity to transform and grow their business. Weebly focuses on four key areas for business owners: it helps them to get going with expert guidance on how to launch a website, before giving them access to the website builder. Next, it helps them to simplify the selling process before lending a helping hand when it comes to growth.

Given that payments are processed by Weebly, business owners can look forward to focusing on their business rather than getting bogged down in the logistics and details. This liberates a business owner’s time to help them focus on future growth and new strategies.

Weebly also offer assistance in a range of additional areas like domain management, too, which is a nice touch and really shows how the platform can drive additional value for businesses.

Volusion

Volusion is a piece of ecommerce website store and shopping cart software. The platform suggests that its solution has been proven to sell 4x more when compared to competing hosted shopping carts, so it’s making some bold claims!

Given the quality of the platform, we could see this being the case. The platform gives website builders everything that they need to sell online effectively. This means that they can create a store, sell their products, and grow their business.

Over 180,000 stores are hosted through the Volusion platform, meaning that you don’t have to worry about legitimacy or an ability to scale. There are some really stunning themes on offer here and it’s great fun to whizz through and imagine how your store could be brought to life by one of them.

Like many of the other platforms in this list, Volusion also offers additional assistance with key tasks like inventory management and payment collection. There are also unlimited product options that can be offered via the platform.

Magento

Magento is an ecommerce platform that partners with thousands of retailers and brands around the world. It offers flexible cloud solutions that help businesses to grow quickly and innovate along the way.

The platform suggests that it offers next-generation technology that is capable of offering distinct digital retail experiences to users. This helps businesses and sellers to breathe life into the ecommerce website and set it apart from the competition in a crowded space.

There are a huge range of additional features on offer here, such as the ability to manage Google Shopping Ads through the platform. Businesses will find, though, that this solution doesn’t offer the same WYSIWYG editor as some of the competing platforms on this list.

This can make Magento seem like more of an intricate and formal investment, which might make some businesses hesitant to get involved. Still, if the case studies and customer reviews are anything to judge by, businesses can look forward to a pleasant and professional experience when working with the Magento team.

SiteBuilder

SiteBuilder is more of a traditional website editor tool that empowers businesses to create stunning ecommerce websites.

The platform can help with a wide range of areas such as a site’s domain name, templates, email addresses, hosting, and telephone support. This fuller package can help some confused business owners to get the best results possible with minimal complexity.

The process of working with SiteBuilder seems very straightforward again, with just three simple steps standing between a business owner and their amazing new online store. As with Magento, though, some business owners will find that this is not quite as flexible and free as some of the other options on this list.

You should be sure to compare pricing and more in order to make sure that this really is the best option for your needs – there’s no harm in shopping around and doing your research!

Good Luck Finding Your Ecommerce Platform

As you can see, there are lots of potential ecommerce providers out there. It’s a competitive space and there are lots of driven and talented companies looking for provide for the many online sellers out there.

This competition is a good thing and while it means that it can often be a little more complicated to find the option that’s right for you, it means that some truly wonderful products are on the market now.

We hope that this closer look at the ten absolute best ecommerce platforms has been useful for you! There’s a lot to consider and we can imagine that it will take you a long time until you find the option that’s right for you – we’re sure that once you find the right option, though, the sky will be the limit!

How are Marijuana Business loans possible?

With cannabis now legalized in many states and legislation in place to expand that further, the cannabis industry has exploded into a multi-billion dollar industry practically overnight. 

However, regulations surrounding the cannabis industry are strict and tricky to navigate, making acquiring cannabis business loans difficult for any Marijuana-based business.

Why is it so challenging to get financing for your cannabis business, and what can you do about it? 

The challenge of Obtaining Cannabis Business Loans

The heart of the challenge of obtaining cannabis business financing comes from the legalities behind cannabis itself. 

Cannabis is now legal for recreational use in 11 different states, with more states expected to pass legislation in the near future:

• Alaska
• California
• Colorado
• Maine
• Massachusetts
• Michigan
• Nevada
• Oregon
• Vermont
• Washington
• Washington D.C.

However, cannabis isn’t legal on the federal level, and that’s where the main challenge arises in terms of obtaining financing.

All banks are regulated by the federal government (even the little ones) and are required to flag illegal transactions under the Bank Secrecy Act based on federal law. That means they must fall in line with the law or risk huge fines– or much worse. 

As a result, you can’t walk into your local bank and open any kind of business account (including a loan) as a cannabis business.  Making it very difficult for a federally chartered bank to provide any Marijuana Business loans.

The good news is, there are alternatives. 

Alternative options for obtaining cannabis financing

Fortunately, federal law nor compliance keep you from being able to acquire business financing. You just need to know where to look to get it. 

If your local bank and credit unions have turned you away, consider these options for obtaining the capital your cannabis business needs:

Equity financing

Equity financing is one of the best routes to go with any cannabis business as the industry is considered very desirable among investors.

With equity financing, you can go two different routes, venture capital or angel investing:

Venture capital

Obtain seed funding from venture capitalists specific to the cannabis industry. 

See the most current list of VCs at New Cannabis Ventures and take some time to search for cannabis-specific VCs such as Snoop Dogg’s Casa Verde Capital. 

Angel investing

Similar to venture capital, acquiring angel investors is another viable route for cannabis business loans with its own set of benefits. 

With angel investing, you have more control due to no one investor having such a prominent position of power over the company as in the case of a VC. 

AngelList is the best place to find angel investors and you can do a cannabis-specific search to identify investors who have specifically identified themselves as interested in investing in cannabis-related businesses here. 

Crowdfunding

Crowdfunding is another great option for obtaining a cannabis business loan. 

Both Kickstarter and Indiegogo, the two most prominent crowdfunding platforms online, are decent options for funding your startup or next product. 

In addition to the major platforms, cannabis-specific sites exist as well and may serve as better platforms. Cannabis crowdfunding sites include Fundanna and CannaFundr. 

Alternative lending

Another great option for obtaining funding for any kind of cannabis-related business is alternative lending.

If you’re interested in obtaining a more traditional loan and don’t want to have to answer to investors, alternative lending is a solution to the lack of bank funding. That’s because many alternative lenders openly work with and lend to cannabis businesses. 

Alternative lending is an umbrella term referring to any financial product offered by an alternative or private lender.

Within that umbrella, there are several options for financing your cannabis business: 

Term loans

If all you need is a single lump sum to get off the ground, or to get your next product up and running, a term loan may be the perfect fit. 

With a term loan, you get a sum of capital in exchange for paying that amount back at a specified interest rate based on your business qualifications. 

Learn more about small and medium-term loans.

Business line of credit

With a business line of credit, you don’t just get a single sum of money but a recurring amount you can access whenever you need extra capital. 

A business line of credit is ideal if your cash flow is uneven. For example, if you have one or two vendors that make up a large part of your business and you’re often waiting for payment.

Learn more about business lines of credit.

Merchant cash advance

An MCA is a much newer but increasingly popular form of business financing that involves obtaining an advance sum based on your regular credit card sales.

Those sales are then also used as a kind of collateral to pay back the loan. Once approved, you pay that sum back based on a percentage of your credit card sales.

Learn more about merchant cash advances.

Additional resources for growing your cannabis business

In addition to the above ways to obtain funding for your business, with the rise of the industry as a whole, many new resources are now available to help you grow your cannabis business. 

Here are a few of the best new cannabis-specific resources to help grow your business: 

CanPay (Debit system)

CanPay is a debit system specific to the cannabis industry that allows you to accept debit payments from customers provided they also use the platform. 

This is useful because, as we talked about earlier, most banks won’t touch the cannabis industry due to federal regulations. 

That means they won’t even allow you to open a business checking account with them, which can make it difficult to accept debit payments as a cannabis business, often resulting in many cannabis transactions to be cash as a workaround. 

However, with CanPay, you can accept debit payments. At least until federal regulation shifts in the industry’s favor and a workaround is no longer needed.

Green Bits (Point of sale system)

Green Bits is a point of sale system. There are a lot out there, but what makes Green Bits special is that it was designed specifically for the cannabis industry. 

Their service is designed to help you stay compliant, that alone making it far and above the best value of any other point of sale system out there for cannabis businesses. 

Higher Yields (Consultation services)

If you’re in the beginning stages of your business or have hit a rough spot and could use some industry-specific advice for growing your business, Higher Yields is a cannabis-specific consulting firm worth looking into. 

Their services include help with licensing, facility design-build services, financial plans, cultivation management, marketing, branding, compliance, and more. 

As per their website, “The medical and recreational marijuana markets are complex, ever-changing, and full of pitfalls that experts can help your business navigate. Protect your investment with the know-how of professional marijuana business development consulting services.”

9/25/19 Update: Historic vote on new cannabis banking bill paves way for providing key financial tools to business owners

U.S. News recently reported that a new measure, designed to protect financial institutions that service cannabis companies, passed the House of Representatives in a bipartisan vote just last month (Sept. 25th, 2019).

The bill, the first standalone cannabis-related bill to pass a chamber of Congress, is designed to protect financial institutions who support cannabis businesses from criminal prosecution and other negative action.

If the legislation ultimately passes, it will be a huge win for the cannabis industry. No longer will cannabis businesses have to take inconvenient steps to process payments and run their business in general. 

If the bill passes, they’ll quickly begin to have access to all the same financial tools (access to business bank accounts, online payments) that other businesses have. 

“We applaud the House for approving this bipartisan solution to the cannabis banking problem, and we hope the Senate will move quickly to do the same,” Neal Levine, chief executive officer of the Cannabis Trade Federation and one of several groups who lobbied in support of the bill, told U.S. News. 

The bill, referred to as the Secure and Fair Enforcement Banking Act of 2019, passed by a vote of 321-103. However, it’s not yet known what its chances are in the Senate. For that, we’ll just have to wait and see. 

Don’t let compliance and legislation hold your cannabis business back

There are still hurdles to be overcome if you want to start a cannabis business, but those hurdles are quickly disappearing.

Use the tools and resources we discussed, from ways to obtain the funding your business needs to additional resources to help it grow and stay compliant, to overcome those hurdles maximize the growth of your business.

Starting a rental property business can be a very lucrative endeavor. However, it’s also not the easiest business to get into. For one, acquiring property requires a lot of capital. Getting a bank loan to purchase property may also prove a little tricky especially if you’re just starting out. Moreover, finding trustworthy tenants who will take good care of your unit/s and pay their rent on time is yet another challenging step.

Given all these perplexing concerns, how do you start the journey to becoming a great landlord? Fear not, since others have been in your shoes before. Below, we’ll look at advice from experts in the field on the fundamentals of starting a rental property business – from financing to acquisition, to management.

Leverage Existing Property for Financing

For those who are looking for real estate to invest in, it would be advisable to leverage your existing home first. Small Business suggests two ways of doing this: either through using the equity in your home as down payment for buying a new property, or through renting out your current home while you move into a new one.

However, if you plan on staying in your home but need capital, you can also apply for a home equity loan or an investment property loan. Keep in mind however that if you have zero rental experience, banks may give you unfavorable options on investment loans. Moreover, if you are in the process of growing your rental property business, Fast Small Business Loans from alternative lenders could work for you, especially if you’ve been operating for more than six months and the business is in good standing.

Invest In Condos, Not Co-ops

Once you’ve secured financing, the next step is knowing what type of property to invest in. Understanding your own current business goals will help you in this decision. For example, Yoreevo details how investing in condos instead of co-ops in New York City could be a better way to go if your goal is to actually grow your money. This is due to the restrictions attached to NYC co-ops, which usually come with limitations about how often you can sublet a unit. You’re usually not allowed to sublet a co-op for the first two years of occupancy, and they’ll only allow you to rent it out for two out of five years. Condominiums, on the other hand, are much easier to purchase as well as renovate according to your target market’s wants and needs. Moreover, your buyer pool will expand since foreigners are restricted to renting condominiums.

Find Good Tenants

Military.com shares some tips from real estate experts on the best ways to find the best tenants for your property. Among all the tips, knowing where to advertise is key. Avoid posting on sites like Craigslist since these have been notorious for scammers who change the contact info on rental listings and then take the down payment of potential tenants. For more trustworthy advertising, you can begin by getting referrals from families and friends. Start with broadcasting your ad on your own social networking sites and approaching local businesses in your community. Make use of flyers and newspaper listings.

Get Help in Managing Finances

Once your property leasing business grows and all your properties have tenants, it’s important to manage your finances wisely. The Balance recommends that people who own rental properties should get an accountant, explaining that “owning a rental property is essentially like owning your own business, so hiring an accountant is likely necessary for this situation.” Getting an accountant will not only help you stay on top of your books, they will also give you advice when it comes to paying taxes. This could save you a ton of money that you can eventually use to invest in more property in the future.

We put together the top home based businesses for 2019

Starting a home-based business might seem too good to be true. (Especially if you’re used to working in the corporate sector.)

However, the opportunity to make a healthy living online while working from home is as real as ever.

If you have an internet connection, you already have the only essential tool you need to get started.

Many of the most prominent home-based business ideas require a certain skill set. However, that skill set can be developed over time while you build your business.

Plus, freelance websites like Freelancer.com and UpWork.com make getting started a smooth and easy process.

With the introduction of fin-tech, traditionally non-bankable businesses such as the ones we discussed below or now able to obtain working capital through our Home based business loans programs.

And other business ideas require no previous skill set at all, making them the perfect place to get started.

Below, we’ve put together a list of the best home-based business ideas for 2019.

No matter what your previous profession, skill set, or schedule, there’s something for you.

Top 11 home-based business ideas

1. Blogging

Blogging is one of a few business ideas on this list that makes use of the explosion in demand for information that coincided with the Internet’s birth.

As a blogger, you can take something you’re already an expert at and build a platform around that expertise.

By writing in-depth blog guides, tips articles, and how-tos around a topic, you can build an audience of devoted followers who you then offer digital products such as eBooks and online courses.

If you love to write or are interested in the idea of putting together articles around a particular topic you love, blogging may be the ideal home-based business for you.

2. Social media management

Every company, from big-name brand to that little restaurant around the corner you love to visit on Friday nights, uses social media in some way.

As a social media manager, you can start as a freelancer with multiple clients, helping them get their business noticed using the latest digital marketing strategies, while building your business into a full-fledged agency– all from home.

And with the explosion in value of social media paid advertising over the past half-decade, brands and small companies alike now invest considerable sums into advertising on platforms such as Facebook, YouTube, and Instagram.

If you’re already obsessed with social media and know how to easily navigate around the major platforms, social media management is a home-based business worth looking into.

3. Consulting

Similarly to the explosion in demand for information that the digital age brought about, many are also now searching out experts online to help them learn and grow, whether it be themselves in some way or their business.

As a consultant, you can offer your knowledge in an advisory capacity, creating plans and even helping implement them.

Popular spaces where consultants are sought-after include digital marketing, business, fitness, health (general), and professional and personal performance.

4. Graphic design

Do you have graphic design experience? Were you that person everyone asked for help on small design projects at your last job? Do you love to draw or make any kind of art?

If you answered yes to any of these questions, you might have found your home-based business idea and starting a graphic design business might be right for you.

As a graphic designer, you get to flex your creative muscles for a living. You can create attractive social media artwork, blog images, PDF designs, or any other countless digital visual assets.

5. Programming

Programming is harder to get into than writing or graphic design. However, it’s easier than ever to start learning.

It’s also an incredibly valuable skill that is only becoming more valuable. And any business based around programming (software-as-a-service or an app) can be highly lucrative.

The great part about programming is you can start with something simpler like website design and still make a great living. Then you can work your way up to creating your own software offering as you learn and improve your skills.

Plus, as mentioned, the value of programming knowledge and skill is only becoming more valuable over time– and fast.

6. Virtual assistance

Being a virtual assistant is a super easy freelance gig to start off with. 

As a virtual assistant, you’ll do a variety of tasks for entrepreneurs and business execs. Tasks such as answer emails, create spreadsheets, manage appointments, edit, and even organize events.

This variety of tasks doesn’t just help keep things interesting, however. It can also serve as a valuable springboard for learning what it takes to run a large business as you grow and expand.

If you’re known for being incredibly organized and tend to be the one that your group of friends defaults to when planning an event or working on a project, this could be the perfect fit for you.

7. Professional crafting

In the past, blacksmiths, seamstress, and woodworkers were incredibly important parts of modern society.

However, over time, technological advancements during the Industrial Revolution all but phased them out of necessity.

But the Internet has breathed new life into crafters everywhere, with everyone from metal workers to jewelry makers now having the perfect combination of tools available to them to start a home-based business doing what they love.

Sites like Etsy and to a lesser extend Kickstarter have literally made countless full-time crafters, from custom woodworking and jewelry to clothing and everything in between.

And social media, especially Pinterest, serve as the ideal marketing platforms to build a craft-centered business around given its emphasis on imagery.

If you love any kind of crafting, now is an amazing time to be alive if you’re willing to get your hands dirty and build a business online.

8. Online courses

Similar to blogging and other online business ideas, the online course industry is an incredible opportunity to take something you’re an expert in and design a business around offering that knowledge at a price.

By offering your expertise in the form of an online course, either through sites like Udemy or your own platform on something like Teachable, you can create an educational resource once that pays you continuously.

Plus, the price that online courses demand tends to be high, anywhere from a couple of bucks to even several thousand depending on the niche and perceived value of the material, so the profitability potential is high.

In fact, the online course industry is now worth nearly $30 billion. Talk about opportunity.

9. Data entry

Data entry is possibly the simplest and easiest business you can start online, though it’s not as lucrative.

Instead of working for one company, you can make use of your mad typing skills and one of several freelance sites to build up an entire client base whom you serve.

It might not be the most attractive of home-based business ideas, but it’s something that literally anyone can start right away and make a living.

10. YouTube

Being a YouTuber is similar to blogging but can be different.

As a YouTuber, you’ll create videos on a subject you love or are an expert on and entertain an audience, gathering subscribers, attracting sponsors, and upping your game over time.

And that’s the key word with YouTube: entertain. As opposed to something like blogging or consulting, YouTube is either 100% entertainment or 1-part education, 1-part entertainment (also called infotainment).

Either way, you need to know, or be willing to learn, how to entertain while you’re delivering either laughs or useful or interesting information.

If you’re naturally funny, love to entertain, are a videographer or have some video skills, or are an expert in a subject that naturally lends itself to video (such as cooking) and would love to teach that skill, YouTube could be the perfect platform to build your business around.

11. Online retailer

Becoming an online retailer and selling your own (or someone else’s) product online is one of the most straightforward home-based business ideas there is– and it has huge income potential.

Given its massive success and dominance over the online retail space, it’s no surprise that Amazon is one of the quintessential retail opportunities online.

Anyone can create an Amazon Seller account and begin either reselling name brand products or producing your own to sell on the behemoth shopping platform in little time (check out our guide on How to Sell on Amazon to learn how to get started on Amazon).

In exchange, you can gain great exposure, utilizing Amazon’s massive online traffic to immediately bring eyeballs to your products.

But Amazon isn’t the only opportunity. Many have used platforms like Shopify to start their own retails sites, driving traffic via SEO and social media.

Either way, an online retail store is perfectly suited for working from home.

What kind of home-based business will you start?

Chances are, one or a few of these home-based business ideas have peaked your interest.

The question is: which will it be?

Now more than ever before, starting a business from home that allows you to have full control over your schedule isn’t just a possibility, it’s simple and straightforward to get started.

As with any business, these ideas still take hard work to build. But if you’re interested in working from home, the trade-offs you receive in freedom and control (and, in many cases, income potential) could be well worth it.

What do your customers think about your business? What niche area have you carved out for yourself, and where do you stand in relation to the other options in your niche?

Your answers to these questions will depend on the business-level strategy that you have adopted. It sounds like a fancy phrase, but at some level, every business will make decisions on how to apply these strategies to their products or services and even financing.

Let’s think, for example, about the smartphone market. Apple is renowned for offering the most expensive devices of the highest possible quality, while manufacturers like OnePlus and Huawei produce devices that attempt to blend together price and functionality.

Each business is vying for a different part of the market to stand out from the competition and win their share of the profits. But how exactly do those businesses achieve this, and how can business-level strategies be better understood?

In this post, we will explore what business-level strategies are, the key strategies out there, and how they can be applied to your business.

What Are Business-Level Strategies?

Put simply, business-level strategies are actions that a business can take to provide value to their customers and gain a competitive advantage over their competitors.

Michael Porter is a professor at Harvard Business School, and he is widely regarded as a leading authority of matters of corporate strategy. In his work, Porter has outlined how there are three key types of business-level strategy that organizations can pursue.

These three strategies are defined as Focus, Differentiation, and Cost Leadership. Here is a closer look at each of those in turn to give you a more detailed idea of each.

Cost Leadership

This business-level strategy refers to those attempts made by businesses to cut costs and offer prices to customers that are below the industry average. Businesses can achieve this using a range of techniques, such as developing close ties with suppliers and developing new products.

By passing those savings along to their customers, those businesses are able to increase their profit margins and secure a unique position within the market. Think, for example, of those companies like OnePlus which offer prices far below those of competitors.

Differentiation

Some businesses aim to win market share and defend their higher prices by powering-up their offering with unique features that please their customers. Think of Apple, for example. It’s premium products come at premium prices, but it is consistently seen as offering the best possible features.

Focus

Many businesses try to beat larger competitors by offering an unparalleled level of focus when it comes to both Cost Leadership and Differentiation. Smaller businesses are often able to achieve levels of focus that cannot be matched by larger and more inflexible players.

Choosing Which Strategy Is Right For Your Business

Where does your business stand, and which business-level strategy should you adopt? This all depends on the research that you have conducted, what your customers value, and what your business is actually capable of.

You can explore these two areas in more detail by asking these two questions:

– What do your customers value the most? Cost savings, product quality, or brand prestige?

– Does your business have the resources and capacities to pursue the best cost/quality?

How To Apply Business-Level Strategies and Avoid Risk

Here’s a closer look at how you can work to apply each of those business-level strategies while avoiding the risks that are associated with each of them. Let’s begin with the cost leadership strategy.

Cost Leadership Strategy

In order to differentiate your business and make it a cost leader, you’ll need to do everything that you can to lower costs and keep them far below those of your competitors. Here are just some of the methods that your business can use to reduce costs:

– Build state-of-the-art manufacturing facilities which can help you to boost both efficiency and productivity.

– Maintain a very tight level of control over both product and overhead costs to push down prices and the cost of production.

– Minimize the cost of sales, research, and development as much as possible. Ensure that every department in your business operates in a lean manner.

Companies like OnePlus and Huawei are capable of offering very attractive prices thanks to an unwavering commitment to their cost leadership strategy. They achieve these low prices by sourcing their products from cheap competitors and limiting the amount of money that they spend on activities such as marketing and sales.

The manufacturing facilities are also located in places that make business cheaper, while their manufacturing processes have been built from the ground-up to reinvent the wheel and do things in new ways.

The big risk in terms of cost leadership is that your competitors will simply emulate your strategies and that your cost-saving techniques are not unique to your business. Circumstances can also change, too, meaning that your strategies may become more expensive over time.

Differentiation Strategy

The specific way that you differentiate your product or service will depend largely, of course, on the niche that you are operating within. You could make sure that your product or service is superior in terms of the features and functionality that it offers, as well as its durability, reliability, and support.

A strong differentiation strategy relies upon effective sales and marketing, and the ability to articulate and evidence the value of your product or service. You will, of course, have to conduct sophisticated and extensive competitor research and understand the landscape that you are operating within.

Let’s think about Apple. The company does a wonderful job of articulating its many strengths and building hype around its products. The average consumer perceives Apple products to be of a much higher value when compared to its competitors. Amazing marketing and advertising helps in this area.

There are risks with differentiation too, though. You may find that once your product or service has been released, your competitors will be quick to follow and you will lose any qualities that made you different in the past.

To avoid this risk, it’s important that businesses maintain an agile approach to product and service development. This will ensure that the business stays on top and constantly ahead of its various competitors that exist within the market.

Focus Strategy

Does it make sense for your business to target a particular market? If you are able to get a sophisticated and unparalleled understanding of a market and its dynamics, you will find that you have a strong advantage when compared to your competitors.

Applying this strategy relies upon following the techniques that were outlined above, but applying them to a very narrow portion of the market. Your marketing and sales strategies must also be absolutely stellar, or you may find that you fail to identify and engage with your target audience effectively.

Think about Otterbox, for example. This company works to offer premium smartphone cases to its customers and specializes in this very distinct area. The company has never strayed from this specific area and it constantly maintains a very high level of focus on improving its offering. A lot of companies looking to pursue this business-level strategy can learn a great deal from this example.

As ever, there are some dangers and risks when using this business-level strategy. You may find that your competitors focus even more intensely upon a smaller division of your market and cannibalize your customers. You may also find that a shift within your industry means that bigger players may choose to enter your niche.

Let’s imagine, for example, that you are a company that offers a very specific SaaS service. You may find that over time, larger-scale competitors enter your niche and begin to offer a competing service.

Choosing the Correct Strategy

You may find that your business-level strategy is one of the first decisions that you make as a business. In fact, you will often find that your business idea spawns from you identifying a space within the market.

It’s important that you get this decision right. You should think about it from every possible perspective and dedicate a lot of time to thinking about it. You should also try and discuss this idea with your colleagues and other industry insiders to determine its viability.

You may also find that it makes a lot of sense to pursue a hybrid strategy. This can broaden the appeal of your product and/or service to boost your profits and help you capture as much growth as possible. Many businesses attempt this. Think, for example, about supermarket chains which offer premium products in addition to own-brand offerings.

Think Carefully

We hope that this post has helped you to think about business-level strategies in a new way. Essentially, it’s all a matter of deep thought and keen research. Once you discover your target market and what their needs are, you will be able to develop a keen business-level strategy that helps you to succeed.