Month: August 2023

Small Business Administration Loans and How to Get Approved

August 25, 2023

According to reports, there are over 30 million small businesses in the U.S. In addition, small businesses employ 47,5% of the workforce, which equates to roughly 58.9 million people. Small business owners need to know more about Small Business Administration loans.

Thanks to the fact that small businesses are powering the U.S. economy, the government has opted to support the opening and growth of small businesses via Small Business Administration loans.

As these loans are designed to provide relief and stimulus to small business owners, they hold a number of benefits, such as low-interest rates and longer terms.

If you are trying to obtain financing for your business, you do not want to skip over Small Business Administration loans. These loans offer small business owners an opportunity to capitalize on some of the lower interest rates.

However, before you go ahead and apply, there are a few things that you need to get prepared beforehand to increase your chances of approval. Read on to find out what these are, as well as how to apply for a SBA loan.

The Benefits of Small Business Administration Loans

The are many benefits of Small Business Administration loans as they are designed to provide government-backed assistance to small business owners in the U.S.

The following are some of the main benefits of SBA loan programs.

Better Terms

Most small business administration loans are actually made by independent lenders but are backed in part by the Small Business Administration. Because a majority of the loan amounts are covered by the SBA, lenders are able to extend more generous terms than for regular loans.

For example, depending on what lender is administering the loan, you could enjoy APRs ranging from 5.0% to 10.0%. The exact rate you get will depend on what type of Small Business Administration loan you take out. It also depends on the duration of the loan and the spread that the lender applies.

SBA loans are fixed at the prime rate; however, lenders are allowed to add on a spread in order to cover their own costs. To keep these down, the Small Business Administration caps spread at 2.25%-2.75%, depending on the loan maturity.

Because of this, SBA loans often have much lower interest rates than other loans that you might apply for. This is particularly true if you do not have a high credit score and therefore can only secure loans with high-interest rates.

Fewer Excluding Requirements

The other benefit of SBA loans is that they can be easier to apply for than other types of loans.

In many cases, a business that hasn’t been up and running for a year or so will have a very hard time getting a loan. This makes it difficult for business owners to raise capital and grow their business. SBA loans were designed to solve this problem.

What’s more, they are also geared to assist people who typically have a hard time with business loan approval. Such as business owners in outlying areas, female business owners, or disadvantaged business owners.

However, at the same time, you will need to have a viable business model. You should prove that your business will be able to achieve growth. A small business that is sinking in debt or mismanaged is not likely to gain an SBA loan approval.

What You Need for a Small Business Administration Loan Application

The benefits of Small Business Administration loans make them a good funding option for many small businesses. However, SBA loans are designed to have less stringent requirements.

They are meant to be more accessible for small business owners, but the approval process can take some time. One of the things that can lengthen SBA loan approval times is not having the right documentation together from the get-go.

To prep for a smooth SBA loan application process, you should assemble all the required documents. These include your business certificate or license, personal financial statement, office lease, loan application history, and resumes for key team members.

Besides these items, there are a number of other documents, statements, and returns you should get lined up. These are as follows.

1. Know Your Personal Credit Score Before Applying for an SBA Loan

If you are starting a new business, then it likely won’t have its own credit history. Even businesses that have been running for some time might not have their own credit score. Because of this, your personal credit score might be used during your approval process to determine your eligibility.

You won’t have to provide your credit report along with your application, as the SBA or lender can access this themselves. However, it is a good idea to request your credit report in advance. The three main credit reporting agencies are Experian, Equifax, and TransUnion.

Once you get the three copies of your credit report you can look them over for discrepancies. If you spot any errors, you should take these up with the reporting agency in writing and have them rectified before you apply for an SBA loan.

Although the importance of credit scores is not as high for ordinary loans, your credit score will make a big difference to your SBA loan application. This is why you should take the time to make sure that everything is accurate.

2. You Business’s Credit Report (If It Has One)

If your business does have a credit score, then this will be used by the SBA or lender to ascertain your business’s track record with credit repayment.

If your business has a credit history, you should invest the time to pull your business’s report from Dun & Bradstreet. Then ensure that it is error-free before you move forward with applying for a Small Business Administration loan.

3. A Professional Resume

When applying you should also submit a professional resume. This details your business and industry experience. This is your chance to let the lender or SBA know why you are qualified to run your business and make it a success.

4. Your Personal Tax Returns

Besides your credit report, you should also have your personal tax returns ready. These will be required by the SBA, especially if you have yet to submit your first business tax return.

5. Knowledge of the Types of Small Business Administration Loans

Before you apply for a Small Business Administration loan, you will want to know which type of SBA loan you need. The SBA has four types of loan programs. These include:

The 7(a)-loan program
CDC/504 loan program
Microloan program
Disaster loans

The 7(a)-loan program is the most popular. Funds from these loans can be used for a variety of things. Like working capital, purchasing property, other asset purchases (such as machinery and equipment), and even debt refinancing. These loans have a maturity of up to 10 years for working capital and 25 for fixed assets.

The CDC/504 loan program, on the other hand, offers loans that are specifically designed for financing major assets such as the purchasing of land and buildings. For these loans, you will typically have to put up 10% of the costs and will have 25 years in which to repay the loan

The microloan program offers businesses the chance to borrow a small amount of money to be paid back on shorter terms. These loans are typically for startups or very newly established businesses.

If you have been in a disaster, you might be eligible for the SBA’s disaster loan program. These loans have very low rates of interest and are designed to get you back on your feet after a set back from a declared disaster such as a hurricane.

6. The Financial Statements, Tax Returns, and Bank Statements of Your Business

If your business is up and running, then you will need to gather together its tax returns, as well as its financial statements and bank statements for the last three years.

The financial statements should include copies of your business’s income statement, balance sheet, business debt schedule, and cash flow projection.

7. A Business Plan is Required for Small Business Administration Loans

For both new and existing businesses, the SBA will require you to submit a business plan. The business plan needs to outline your operational and financial projections for the future. It will need to lay out the more intangible aspects of your business such as its mission and values.

Your business plan is the opportunity to convince the SBA and lenders that your small business is worth the investment. Therefore, take time to make sure that it is based on market data and conveys your vision clearly.

8. Collateral

Small Business Administration loans do require collateral. Although the SBA backs most of the loan, you will need to back a portion of it. What’s more, if an SBA lender deems your loan to be high risk, you will be required to provide more collateral.

You can choose to use personal or business assets as collateral to secure your loan. These are some of the main things that you will need to apply for a Small Business Administration loan.

Most small business administration loans are actually made by SBA lenders we work with. For more information on how to apply for an SBA loan, you can take a look at the Small Business Administration’s application checklist.

Need to Apply for a Small Business Administration Loan? Start Here

The benefits of Small Business Administration loans make them a prime option to choose if you need funding for your small business. If you want to apply for a Small Business Administration loan, you are in the perfect place.

Instead of hunting down and choosing a bank to apply through, you can use our convenient online application service. Within our network of approved lenders are SBA backed providers who will want you to apply for an SBA loan with them.

Simply complete our fast and free online application and one of our SBA loan advisors will match you with up to five Small Business Administration lenders. Find out more by applying today.

A Definitive Guide On How to Start a Staffing Agency

August 15, 2023

Gone are the days when a resume and firm handshake could land a job. Finding a job is a full-time job these days. In fact, many will send hundreds of applications during their search.

For some, it takes 15+ weeks to finally land a job. People turn to a staffing agency as a way to streamline job placement. Staffing agencies hire employees who go on to work for other companies.

These jobs are often temporary but can offer part or full-time work. The agency collects a fee or partial pay when placing an employee — they’re an intermediary. Interested in learning how to start a staffing agency?

You’ve come to the right place since this post covers just about everything needed to get started. So, follow along, take notes, and prepare to explore this great business opportunity.

Part 1: Market Research on How to Start a Staffing Agency

The U.S. staffing industry takes in 144.5bn revenue each year. There are some 20,000+ staffing agencies throughout the U.S., too. These two stats should tip you off as to how much competition you’ll have while you’re learning how to start a staffing agency.

Part 1 shares the preliminary steps you’ll take when starting a staffing agency:

Find a Niche

A niche is a smaller segment of a larger market, topic, or interest. In exploring one, your agency isn’t competing with every other one in the market. Likewise, you get to build a unique brand that will help its longevity and growth potential.

Here’s how to find your niche:

Think of the market and its major friction points
Imagine the ideal client and the problems they face in the job hunt
Determine the unique solution your agency could deliver to a client

Maybe you’re building an agency that staff’s pet-friendly businesses. Or perhaps your agency specializes in working with senior clients.

Look for a way to stand out and you’re bound to find a niche market for it.

Competitor Analysis

You’re not the first person to start a staffing agency, nor the last.

Leverage your competitors:

Figure out how they recruit and place prospective clients
Create a swipe file of their print and digital materials
Read reviews and testimonials or talk with past clients

You want to get as much information about the competition as possible.

The information gained from the analysis gives a better foothold in the market. It also reaffirms your business decisions and goals. Ultimately, it helps you figure out how exactly you’ll stand out and become a player in the industry.

Feedback and Guidance

It doesn’t hurt getting insights, feedback, and opinions about your business ideas.

Seek insights from business mentors and consultants
Get feedback from trusted peers and potential clients
Ask for opinions from the market and industry at large

Use plenty of feedback systems for your ideas to unveil shortcomings and opportunities. Repeat this over and over until your idea is fully vetted.

Part 2: Payroll Funding and Planning on How to Start a Staffing Agency

There is no doubt that you have a lot of questions about starting a business. The biggest of these questions likely come from the early planning stages.

Part 2 shares the essential planning and requirements for setting up an agency:

Write a Business Plan

The business plan outlines the essentials of your business’s operations:

Business description
Executive summary
Type of business
Marketing outline
Revenue projection

From sole proprietorship to LLC, offering temporary staffing to temp-to-perm, this business plan is your blueprint to success. Start with the free resources offered by SBA.gov. Later, you can work with an attorney when setting up the legal entity.

Get Business Payroll Funding

The startup costs of a staffing agency need to cover:

A professional location for an office
Payroll covered for a few weeks up to a couple of months
Ad and marketing expenses

A professional location for an office is a must because many clients will come through those doors. It’s important to present the business as professional vs a fly-by-night business running out of your kitchen.

Payroll funding is the heftiest startup cost and is necessary in order to cover payroll and payroll taxes. You will need to be able to cover payroll for however long it takes for your clients to begin paying their invoices. This could be a few weeks or up to a couple of months.

Capital must be budgeted for ads and marketing, too. Your sales team will hit the road every day, drawing interest to the agency. Meanwhile, ads and marketing campaigns will build the agency’s brand, and funnel prospective employees and clients to the business.

Expect to cover double your projected costs when starting up. Consider a payroll services company who also offers payroll funding as a way to manage your payroll and to help cover these early expenses.

Operational Essentials

Set aside time and money to visit the operational essentials:

Register the business
Get an employer identification number (EIN)
Apply for licenses and permits
Set up business accounts
Apply for trademarks

SBA.gov offers a handy legal requirements checklist that’ll cover items 1-3. As for the others, talk with your accountant to set up proper business accounts. Then, swing by www.uspto.gov to register your staffing agency’s trademark.

Part 3: The Business Launch of How to Start a Staffing Agency

Ideas and everything before this point is worthless without action. By now you’ve done the research and got the paperwork sorted. The idea is sound, funding is there, and the market shows opportunity.

Part 3 shares how to take the ideas/concepts and launch the physical business:

Find a Location

The location of your staffing agency will depend on:

Budget
Market
Niche

Take into consideration the importance of a professional appearance and covering months of payroll during startup. These two are your budget’s top priorities.

You’ll want to consider the following for the budget:

Local business types
Clients and talent
Logistics and accessibility

Think of the big picture for your staffing agency. If needed, get a small business loan to help capitalize on a potential great real estate deal.

Hire Employees

The success of your new staffing agency ties to quality clients. Quality clients are found by the tireless effort of your sales and support team. So, bringing on talented individuals is paramount for the success of your staffing agency.

How do you hire employees? The simplified overview is this:

Determine your needs, requirements, and expectations
Create detailed job advertisements, placed locally and online
Bring in candidates and conduct an interview
If necessary, but more than likely, run background checks or an employment verification
If hired, have them file new employee paperwork

Set the new hires up with seasoned professionals to aid in the onboarding. Or you could use training courses if these individuals are the first hires.

Note: The SBA offers an extensive overview of hiring requirements. Though, you could also refer to paid services to navigate this area.

Attracting Clients

You and the sales team will spend considerable time during its startup attracting leads. Attracting clients (business and workers) work the same in a lot of ways.

Try the following to attract clients:

Ask for referrals
Attend networking events
Attend trade shows
Cold call or use a vetted list of potential clients
Scope the competition
Post listings on job sites
Leverage social media

Commit to a schedule of lead generating tactics during those early weeks of the launch. Continue these actions well past the first few clients, so there’s a steady stream of talent and opportunity. In time, the agency will have enough talent to sustain its operations.

Part 4: Sales, Growth, and Success is Why it Helps to Know How to Start a Staffing Agency

Competition is incredibly tough and cutthroat in the staffing industry. You’ll need to continually explore proven advertising and marketing strategies. Growth and longevity should become major, daily goals and metrics you’ll want to meet.

Part 4 outlines how to see the business thrive and build a legacy:

Growth Tactics

All good things come to an end. Clients and employees move on, and new competitors enter the market.

Investing in sales and growth tactics are a must:

Automate client checks and placement
Invest in employee retention strategies
Use smart ads to lower campaign costs
Let recruiters own their efforts unabated
Expand into new, enticing markets

Budget for growth investments or turn to business funding when appropriate.

Longevity and Legacy

As seen, major happenings spike layoffs and unemployment claims. This could mean more opportunities in finding clients. Yet, who knows how these events impact your business’s operations and if you could place clients into work?

Thriving and building a legacy is built on:

Great customer service
A memorable brand
Strong, adaptive leadership
On-going, competitive campaigns

Don’t get stuck in old ways if you wish to thrive and build a legacy. Adapt to the markets by staying up to date with trends. Take a few risks while you’re at it, and leverage feedback and fresh ideas even if they have you scared.

This is Only the Beginning of How to Start a Staffing Agency

Most businesses fail to ever see their first-year anniversary. Even fewer businesses reach the 5-year mark. As for 10 years of success? Well, that’s something you’ll have to see for yourself if you get there.

This post merely scratched the surface of how to start a staffing agency. There are many more challenges that lay ahead. There is a lot of great information out there.

You’ll find many great websites, staffing associations, and networks to support your staffing agency. Tap every resource you can!

We, at Your FundingTree LLC, are here for when you need us. We’ll do our very best in finding the appropriate financing to help you meet business demands. And we could tell you a thing or two about business success.

Let’s collaborate on seeing your staffing agency reach its 1, 5, and 10+ year mark. Get in touch with our experts, today, and learn how to apply for staffing business funding.

How to Apply for a Business Loan: The Top Tips to Know

August 4, 2023

Business loans can help your business grow and stay afloat. When so many people are taking out business loans, it makes you wonder, should I get one too, and do I know how to apply for a business loan?

Business loans can help your business grow and stay afloat. Below we’ll look at how to apply for a business loan. This guide will help you if you’re in the market for a business loan.

Knowing How to Apply for a Business Loan Begins with Writing a Business Plan

To start, you’ll want to write a business plan. In this plan, you’ll describe why your business needs the funds. You’ll need to say what you’ll use the loan for and how much money you need. This plan will be sent to prospective lenders.

Writing the business plan will help you figure out how much money you need and how quickly you’ll be able to repay it. You’ll learn this as you’re preparing your financial statements. These statements must be included in your business plan.

Be clear on what you plan to spend the money on and why it’s important for your company. Don’t say you need a specific amount of money for the company without stating what its intended purpose is. For example, you can say you need it to upgrade equipment, buy inventory, expand your business, etc.

In this plan, you need to describe how you intend to pay back the loan as well. You need to show how much money your company is projected to make. This will help assure the prospective lender that you’ll be able to pay back the loan.

Below we’ll list what should be included in your business plan:

Past and projected financial statements
- Cash flow
- Income statements
- Balance sheets
Collateral statement
Your goals
Your competition
Market analysis
How you’ll expand the company

Choose the Business Loan You Want

Part of knowing how to apply for a business loan involves knowing what types of business loans are available. There are quite a few different business loans out there that you could get. Make sure to do your research so you can pick the loan that best fits your company’s needs.

If you’re just starting a company, you may not be able to get a loan right away. Most lenders will want to see your cash flow statement. You won’t be able to provide the statement until after your first year of running your business.

Seeing the cash flow statement will help them determine if you’ll be able to pay back the loan. You may be able to qualify for an SBA Microloan, a personal loan, or get a business credit card in the beginning.

If you’ve been in business for at least a year, and your financials are readily available, then more loan options become available to you. Some of these business loans (which we can easily help you with) include:

If You Know the Type of Loan You Want, Then It’s Time to Find a Lender

Don’t just look at one place when deciding on the lender you want to apply for a small business loan with. There are many different options out there, make sure you explore them all. Once you’ve narrowed down your search, compare your top options.

Find out which lender will give you the best loan proposal. Review all of the loan proposals that you have received and decide which ones you’ll most likely get approved for. Moreover, try to pick the loan with the lowest annual percentage rate (APR).

It is always a good idea to speak with more than one lender, so you are able to look at multiple loan proposals. By doing this, you may end up finding more favorable interest rates and terms.

Below is a list of some of the different types of direct lenders you can use (which we can help you find):

Banks
Credit Unions
SBA Lenders
Traditional Direct Lenders

Find Out If You Meet the Lenders Requirements

First, you’ll need to allow the lender to pull your personal credit score when you apply for a business loan. If you have a credit score at 750 or above, that’s a great start to being approved for a loan. If you are in the 700-749 range, you are still in good shape but may need to provide more information about your credit.

Once you reach 640-699 it gets a bit more complicated. You may qualify for some loans, but you won’t get the best deals. If your credit score is below 640, then your loan options become very limited. If you have a low credit score, you’ll want to work on improving it before applying for a loan. This is why you need to know how to qualify for a small business loan.

Second, to even qualify for most business loans, as we stated before, you need to be in business for at least a year. Things such as being profitable and keeping up with your liabilities will help to increase the possibility of being approved for a loan.

Third, what’s your annual revenue and how much profit do you make? Your lender will state a specific amount in interest payments they expect to be paid. Find out how much it is and decide if your business will be able to keep up with making timely interest payments.

Finally, make a decision on whether you think you’ll be able to pay back the loan on or before the agreed upon due date. If you can’t afford to pay back the loan on time, then you’re most likely not going to be eligible.

Fill Out the Business Loan Application

After you have figured out what type of loan you want, and which lenders you want to apply with, it’s time to fill out the application. Make sure you have all the proper paperwork readily available as to make the application process smoother and faster.

Depending on which lenders you want to work with will determine how you complete the application. For example, online, in person, or over the phone. Keep in mind that the process isn’t quick. It could take a couple of days to a few months before the application process, underwriting, and the funding is available.

Or, if you want to make the application process as easy and as quick as possible, let us do the legwork work for you. Here is our free 90-second online application. All you have to do is fill it out, click submit, relax, and wait for one of our financial advisors to contact you.

Now You Know How to Apply for a Business Loan

Hopefully, this guide has helped you figure out how to apply for a small business loan. It may seem like a lot of work, but in the end, it’ll be worth it. What could be better than saving money for your company in the long run?

It’ll help keep your business going and you won’t have to worry about closing your doors. Reach out to us today if you have any questions or concerns about business loans or call us at 704-904-0774.