Recently, we interviewed John Anthony Castro, US 2024 Presidential Candidate and one of the issues explored was community development and small business financing, the issue of reach and accessibility. As such we decided to share a presentation, that we were participated in and facilitated with several Small Business Owners in communities, from all over the US. We discussed and provided information on How to access small business financing.
We also had the opportunity to participate in the discussions and share other pertinent information about Investments and the SBA loan and the importance of having a Business Plan. We explored the following: 1. Types of SB Financing and Lending Options:
- Lines of Credit
- Business Acquisition
- Business Credit Cards – New Businesses can receive business credit cards
- Start-up Loans – One of the hardest types to qualify for or to apply for
- Cash Advances
- SBA Loans – Takes Longer to process and requires loss of documentation
- Commercial Mortgages – Takes Longer to process and requires loss of documentation
- Short-term Loans
- Equipment Financing – 99 percent of the time, you will need an Invoice
- Accounts Receivables
2. What Lenders look out for when we talk about financing a business.
- Background Checks
- Personal credit scores – Why do Lenders look at this, when applying for business. Business credit scores are used to determine how healthy is your business. Business Credit Scores ranges from zero to one hundred. Anything above 75 is excellent rating. But they will take an issue if there’s a score below 50. Business don’t use business credit scores much. The main reason why lenders like to use Personal Credit Score is because it’s a tail of what the owner has done. When we talk about mortgages, auto-loans, student loans, personal loans, those are things that are based on you as the individual. And that’s going to stay with you for the rest of your life. But the Business may close at any point in time; example in the COVID-Pandemic, a lot of businesses struggled. So, that’s why they will take a close a look at personal credit score more, it tells them what this business owner is going to do based on that previous history. Now, personal credit scores range from 300 – 850. Lenders like to see as high as possible. However, lenders will look at alternative types of financing for those that have lower scores such as 300 – 600 range, there are plenty of options.
- Time in Business – 50 percent are out of business by the first five years. So, lenders are giving out money to those businesses that have been around for at least 2 plus years as they have to consider their risks as well. Businesses that don’t have a lot of time in business, lending comes with riskier terms. Lenders may go lowers or higher than two plus years. However, there may be other options such as Business term loans, lines of credit, and business credit cards, but has higher interest rates.
- Revenue – This is also very important. Example if someone wants a five-million-dollar loan, lenders will look at what the business has done on a monthly or a yearly basis and particularly they look at yearly annual revenue of $5000 – $10, 000.00 and sometimes that does not add up. So, when we talk about revenue and the amount of revenue and why the need to secure loans, healthy revenues are always good to see, and that year-over-year growth, so that lenders can determine if the business is going in the right direction. In most cases, demonstrating revenue is important when accessing small business loans, but they like to see revenues of up to or over $50, 000.00, annually. This may be difficult to provide so businesses may do well to explore other options such as lines of credit or credit cards.
3. What are the Biggest Hurdles When It Comes to Loans?
- Documentation
- Revenue
- Student Loans
- Tax Returns
- Finding loans with great terms and low interest
- Time and or length in Business
4. Preparing Before you Apply.
- Have a Business Plan, it doesn’t have to be perfect. You may obtain free and downloadable Business Plans with templates and guides by visiting:
- https://www.sba.gov
- Identify How much funds are needed.
- Have a Break-down of how the funds are going to be used.
- Timeline of when the funds are needed by.
- Intended purpose of the funds – such as marketing, inventory or payroll or auto-loan. What’s your plan? Lenders like to see funds being used for activities that will generate revenue for the business such as marketing and inventory. The question is how much are you going to make if you get $5000.00? Will it make you $10, 000.00 and this will help to determine your interest cost, the frequency of your payments etc.
5. Other Types of Financing Options
- Investments may proof to be a better option for many who are unable to meet the requirements needed to access loans. Example, we at The Neoliberal Corporation were approved for a small loan but could not access the funds as our banking partners are not linked with the PLAID system that is needed in order to get the funds. However, the SBA.gov provides direct access to over 294 investors. After completing your business plan, which is also available on their website, you can directly then contact and send your Business Plan to the investors. Consider selling ownership stock if you’re set up as a corporation and invite family, friends and fraternal investment by sharing your plan with them. https://sba.gov
6. What are the Documents to have on hand?
- Business Bank Account – It’s important to separate your business from your personal.
- Other Financial documents and 3 months of bank statements – Lender’s appreciate seeing more financial documents.
- Driver’s License
- Voided Check
- Business License or proof of ownership such as Tax Returns, K-1, Business License, Article of Association paperwork or business registration document.
- Invoices – in the form of equipment invoices, purchase order invoices especially when you need equipment financing.
- Other Financials
7. Loan application Time – the turnaround time may determine where you get your loans:
- Online Market place – application may take anytime between 10 – 15 minutes once you have all your paperwork in place. Will take your application and look for the best option for you and your business. This allows you to find the best option for you. Approval may take 48 – 72 hours but varies depending on the type of loan and owners’ ability to provide documents
- In-person Banking – Lengthier – typically 1 – 6 months
- SBAs – runs through in-person banks. The SBA is not the actual banks giving out the funds, they only guarantee the funds. They set the guidelines and do the underwriting and may take 60 – 90 days or even as fast as 8 days.
- Commercial Mortgages – may take even longer.
8. How did the PPP change Traditional Lending? PPP is the Payroll Protection Program and is a program created during the Pandemic in 2020, when the world was shutting down, and the US government gave out money to businesses that were struggling at the time. It was forgivable money meaning that you were able to say, “hey I use the money to offset certain losses due to the Pandemic,” and the government would come back and say, “you don’t need to return the money back-at-all.” That was a very thoughtful thing that the US government decided to do, when we have often criticized them for some bad things. This is noteworthy and should be celebrated as a positive.
One of the Biggest Ways PPP changed the lending industry was that it led to the rise of FINTECHS, which is Financial Technology. During COVID we had hundreds of thousands of people that were trying to apply for this PPP loan, simultaneously, the flood gates were flung open and suddenly hundreds of thousands of people wanted money to feed their families, save their employees, and the online marketplaces, businesses and individuals wanted to help as many businesses as possible. But there was never gonna be a simple way using manual paper forms, that needs to be sent, signed, printed. So that rise in FINTECH allowed lenders and marketplaces like Lendio to step in and help as many individuals as possible by taking and receiving documents online, so as to help businesses or owners move through the process of obtaining financing as quickly as possible. This was something that never really happened before. This represented a big change in the online marketplace of lending as a FINTECH space, that took some time to establish trust with individuals seeking financing through those mediums. But people eventually start coming in saying “look, I’m gonna give you my documents, we don’t have a lot of time and we need the PPP money now,” and people went to their local banks because they trusted them, and online lending did not have that trust, but PPP changed that as their banks took a lot of time as against online marketplace because it sped up the turnaround time. Nevertheless, there has been reports of several privacy and security breaches with the rise of FINTECH and online and web applications. Recently the FTC, the Federal Trade Commission reported that “Equifax to Pay $575 Million as Part of Settlement with FTC, CFPB, and States Related to 2017 Data Breach.
We at The Neoliberal Corporation and the President of the Corporation has been affected by that and several data breaches which caused us to lose thousands of dollars and customers who abandoned their cart after the data was corrupted and we could not reach or complete customers transactions due via our Woo Commerce store application. We still do not have much control over our Store and had to create a new store front which will be launched soon and also launched a new store via E-Bay. Our Business Integrations on FaceBook was also hacked and taken over by third party applications that were integrated with our business website and Facebook, and we lost hundreds of dollars and had to recently file a report with the FTC. So the issue of digital security and privacy has been affected and the lack of trust is quite warranted when it comes to fears about going to online market lenders to access funds. One have to be careful and even after you install VPNs (virtual private networks, one may still have issues. A Virtual Private Server may also provide extra layer of security and control. We hired a Cyber Security and IT Adviser to help us sort through this and financing for this was not easy. But one may also explain in yur business plans and to lenders the need for accessing financing to protect your business from hackers and loosing potential revenue by installing up-to-date software and systems that minimizes these threats and protect your revenues.
12. Where can we go to access Loans?
- Credit Unions/Banks
- SBA.gov – with over 294 investors where you can contact directly plus a host of resources and the SBA loan application
- Giggle.com – to access external financing that is quick and easy
- Lendio.com – online marketplace that helps to process your application and match you to the right lenders. They work with over 75 lenders. Their application is extremely seamless, and They help to tailor your application. There is no impact on your credit score and ten different types of financing options. They have helped to provide funds totaling over 12 billion dollars to small business owners since their foundation. A lot of that came from their help with businesses during the pandemic. The process is quick and takes anywhere from10-15 minutes. They provide you with one or several loan offers, and you get to select which one you’ll like and then you will complete the loan offer from there. We here at The Neoliberal Corporation is familiar Lendio’s process and got approved for financing through Lendio but was unable to secure the loan due to lack of enough revenue (which is why we were applying for the loan in the first place-to generate and protect potential revenues) and PLAID does not support our bank and cannot be linked with PLAID and therefore we cannot access the loan. As such we plan to go through the investment route until we can establish banking that is compatible and linked with PLAID. We have been utilizing personal savings and donor support, which are two methods that the self-employed individuals may have to utilize in the outset, and this stems from pre-planning and investments to shelter the initial years which have helped us significantly to continue to provide information that is reputable, researched and on the cutting edge and that facilitate development and add value to society and people in community.
- Family and Friends – Jeff Bezos will tell you that he started AMAZON with a $300,000.00 loan from his grandparents.
9. Why is having a Business Plan very Important?
- A startup business plan serves several purposes. It can help convince investors or lenders to finance your business. It can persuade partners or key employees to join your company. Most importantly, it serves as a roadmap guiding the launch and growth of your new business.
- Writing a business plan is an opportunity to carefully think through every step of starting your company so you can prepare for success. This is your chance to discover any weaknesses in your business idea, identify opportunities you may not have considered, and plan how you will deal with challenges that are likely to arise. Be honest with yourself as you work through your business plan. Don’t gloss over potential problems; instead, figure out solutions.
- A good business plan is clear and concise. A person outside of your industry should be able to understand it. Avoid overusing industry jargon or terminology.
- Most of the time involved in writing your plan should be spent researching and thinking. Make sure to document your research, including the sources of any information you include.
- Avoid making unsubstantiated claims or sweeping statements. Investors, lenders and others reading your plan will want to see realistic projections and expect your assumptions to be supported with facts.
- A good Business Plan Template will include instructions for each section of the business plan, followed by corresponding fillable worksheet/s.
- The last section of your Business Plan is “Refining Your Plan,” explains ways you may need to modify your plan for specific purposes, such as getting a bank loan, or for specific industries, such as retail.
- Proofread your completed plan (or have someone proofread it for you) to make sure it’s free of spelling and grammatical errors and that all figures are accurate.
10. What’s one of the First things you do when you are Thinking of starting a Business? Develop or Establish a Presence by leveraging technology, that’s in addition to reading about the product, business and or industry and doing initial research about the business, industry and market and starting a business.
- Start a Blog and write about your business.
- Start a Fan page on any social media platform and engage – the more, the better.
- Create social media accounts and comments on other people’s pages about your idea and about you. Let people get to know you and that you’re about to start a business.
- Get the conversation going – talk about it with your friends, fans, followers, community, church or group.
- This will help to start creating a market or a fan base for your business and your success depends on having a market for your business. That is why we have several platforms and feeds here at The Neoliberal Corporation – Rmckenzie.acdemia.edu, renaldocmckenzie.blogspot.com, acnhor.fm/theneoliberal, Kirkusreview author Page, renaldocmckenzie.com, several social media profiles and pages – Twitter, Facebook, Instagram, Reddit, Tiktok, telegram, WordPress, Goodreads, youtube channel other podcast feeds and platforms, memberships and relationships in and with several professional groups, google ads and other SEO optimizations to help establish and build presence. where we engage and build our customers, viewers and followers. This helps to establish presence, build credibility and reputation and generates trust, relationship and integrity.
11. How do you establish Business profile/reputation?
- Get a business profile and credit score from Duns and Bradstreet or Experian. Business credit helps to build credibility and business reputation and provides access to credit. A business credit score ranges from zero to one hundred and a score above 75 is what lenders typically look for and a score of below fifty is usually unacceptable.
12. Does it matter what type of Company?
- No, it doesn’t matter if you have an LLC or a S or C Corporation to access financing. As long as you register your ownership, that’s all, but the type of business may affect how you file your taxes and report your business earnings and revenues. Further, risks and liabilities borne by the owners are also determined by the type of business structure you plan to have.
13. What are the Lending rates and down-payment required for a business loan?
- Rates varies and is dependent on one’s credit scores, length in business, loan repayment terms/time and amount of funding.
- Usually start-up loans require a 15 – 20 percent down payment in order to secure the loan.
14. What do lenders like to see when borrowing?
- Lenders like to see how much will be generated from the loan and what and how the money will be used. That’s why business loans are easier to acquire than personal, as lenders will finance an activity if it is business related and will generate more from the loan.
15.. Why would someone use a walk-in bank instead of an online marketplace?
- Established Connection and Relationship with Bank
- People Trust their banks
- But lots of people have difficulties accessing loans from their banks. Who do you call? Lendio.com or the online marketplace.
21. What about accessing investments and Business resources that are affordable?
- Contact SBA.gov and utilize resources from your State Business Registration department as they also have a host of free and information ranging from filing, reporting, tracking financing and accessing financing that is local. If you use a paid service such as Legal zoom to set up your business, they may have paperwork at your disposal in the paperwork portal. You may also contact us here at The Neoliberal Corporation for more resources that we can connect you with or provide. Just give us a call:
We discussed these and much more in the packed episode. This article was discussed and presented at a forum and first produced and made available on or podcast, The Neoliberal Round available in all streams.
The Neoliberal Corporation is a Think Tank, News Commentary, social media, Independent Publishing Company that provides education, professional and self-help resources for your educational, professional, and life needs. We provide information so as to make popular what was the monopoly and in so doing investing in others what has been invested in us so as to add value to humanity. We speak to the issues of power and explore strategies in society that stymie progress and challenge diversity, fair game and the ultimate of all things. What is the ultimate of all things? The ultimate of all things is that we become one with reality in all of our individuality. A man said, once you label you negate me. The challenge for society is the issues that continue to drive privilege, power, status and position which is the basis of discrimination and lack. We provide information as we research it and learn to neutralize those strategies that are stacked against the mass of peoples in the world. You may support our Podcast program which first carried this story at:
