Automated cloud or desktop technology gives small business owners access to clear reports, empowers them to be hands-on with their income and expenses, and reduces the number of hours your accountant has to spend on your finances.

It’s no surprise everyone is looking for the best accounting software for their business. But when you’re starting out, you might not be able to outlay hundreds of dollars a year for all the bells and whistles of a paid software system.

Enter free accounting software for small business.

It may not be your most powerful accounting option—but it’s free. It may not have state of the art features—but it’s free. And sometimes, free is what you have to work with.

With that in mind, we’ve compiled a list of the best free accounting software for small business.

We’ll give you tips on what to keep in mind if you want to go the free route. We’ve also got a detailed breakdown of our top 10 in the free accounting software category, and we’re following it up with a few added extras that might broaden your horizons—like free trials of popular software packages.

Let’s get started, with our:

10 Totally Free Accounting Software for Small Businesses

Before we get started, there are a few caveats to get out of the way. All the accounting software we’re reviewing here are legitimately free. You can absolutely use them at no cost, but keep in mind that some offer in-software purchases or give restricted functionality without purchase. Be sure you know what you’re getting before you start loading in your business financials, is what we’re saying.

Here are the free accounting software we’re going to be unpacking today:

1. Wave
2. Zipbooks
3. Akaunting
4. SlickPie
5. GnuCash
6. CloudBooks
7. xTuple PostBooks
8. Zoho Invoice
9. NCH Express Accounts
10. Brightbook

So, let’s just jump straight in at the deep end.

1. Wave

Wave offers a lot of high level functionality for a free accounting software, which is what lands it at the top of our list.

Wave has been a strong player on the free accounting software platform for over 5 years, and has shown steady growth. At last check it had over 3 million users. What does this mean for you? A free software with a large user base is likely to offer better support, regular updates, and be better positioned to integrate with whatever high end accounting system your accountant uses. Because let’s face it: your accountant is not using free accounting software.

Wave is also ready to go for zero payment. Connect unlimited accounts (cash / bank / credit card) and make use of income and expense tracking straight out of the box. You can invite guest collaborators, invoice, and scan receipts for free, too. Wave also offered an integrated lending function a whole year before industry leader, Quickbooks, came to the party. There is also a built-in eCommerce feature in the newer updates.

Pros:

• Free
• User friendly
• Strong accounting functionality
• Customizable invoice and receipt templates
• Cloud-based
• Extensive support documentation
• Access to support from expert accountants

Cons:

• Poor mobile app functionality
• No project management feature
• Limited time tracking
• Limited inventory
• Not scalable for growing business—cannot add multiple users

The bottom line:

Wave’s newest redesign addresses a lot of our previous complaints—they’ve added payroll support (paid feature), cash-basis accounting, an impressive checkouts feature and duplicate transaction management. Despite the list of negatives, we are reasonably confident that Wave will find a way to integrate features to make its software more friendly to larger businesses in the near future.

Wave is a great free business accounting software for beginner to intermediate users. If you’re starting out, freelancing, opening your Etsy shop, or running a small eCommerce site, Wave is worth some consideration.

2. Zipbooks

ZipBooks was a latecomer to the free accounting software scene, launching in 2015. Over 4 years, the company has made a name for itself by offering strong features and automating as much of the accounting processes as possible. The interface provides a great user experience—it looks good, and is clear to understand.

ZipBooks obviously has a free plan (or it wouldn’t be here!) but it offers paid packages for growing businesses, too.

So what do you get for free?

All the crucial features—reporting, billing, expense management, invoicing, and it syncs seamlessly with online banking.

If you need to take advantage of other features, like accepting online payments, you will pay the standard fees charged by platforms like PayPal and Square. Integrated payroll is an option with ZipBooks, and is offered via Gusto for a monthly fee ($39 as of right now) plus a per person charge.

Pros

• Free and upgradeable plans
• Excellent user interface
• Strong features even at the free level
• Easy to use
• Easy integration with other platforms
• Strong customer support
• Clear documentation

Cons

• No inventory function
• Limited customization for invoices and receipts

The bottom line

ZipBooks have updated and upgraded consistently, moving them quickly to the top of the free accounting software game in a short stretch of time. It is run by a group of small business owners, who clearly know what their users need. The invoicing functionality is strong, as is project management, and time tracking. We had some concerns around the inability to track inventory, add items, or customize invoices, but based on ZipBooks update history we wouldn’t be surprised to see these features included in a future update.

If your business doesn’t require an inventory—for example for freelance service providers—ZipBooks could be a great option.

3. Akaunting

Akaunting is a simple addition to our 10 Totally Free Accounting Software for Small Business, with the caveat we mentioned before. Some of the key features are only available if you pay.

The dashboard is easy to interact with, and handles income, expenses, report generation, etc. Akaunting has strong integration with Android, and its responsive design adapts well to tablets and smartphones.

Akaunting supports multiple currencies, and integrates with your online banking smoothly. It lets you track inventory easily, set up custom tax rates and recurring payments, and create unlimited transaction categories and item lists.

Pros:

• Feature-rich and user-friendly
• Multi-currency option
• Free
• Sync accounts
• Track expenses
• Manage recurring payments
• Manage customers and vendors quickly

Cons:

• Heavy on third-party apps
• Many features require payment indirectly—via third-party apps
• Average customer service

The bottom line

Akaunting is worth considering if you are confident that your business will only need the most basic functions: invoicing, tracking expenses, and simple reporting. If you think you would get value from account syncing and receiving online payments, be aware that these are essentially paid features in Akaunting.

It is also important to consider that the use of third-party apps opens your business up to increased risk of data corruption. Given how important our finances are to the health and longevity of our business, you may want to consider if Akaunting is worth the risk.

4. SlickPie

SlickPie is another new kid on the free accounting software block. It’s been around since 2015 and has garnered a strong base of users in that time. Customer reviews are strong, and it offers all the basics you could have to have in a free software package.

Through the simple and glossy interface you can add unlimited users—ideal for scaling businesses—and support for multiple companies. The SlickPie ethos is to offer a jargon-free accounting solution for small business owners, and they deliver it well.

Tracking expenses is easy. Contact management, automated data entry, keystroke shortcuts, and unlimited invoices—these are all strong offerings from the young software.

Pros

• Unlimited invoicing
• Multi-company support
• Multi-user access
• Sleek user interface
• Strong automation of standard accounting practices

Cons

• Poor reporting functions
• No project management feature
• No time tracking feature

The bottom line

This is a worthy accounting software for generating invoices, operating multiple companies financials, and it allows you generate quote and estimates seamlessly. SlickPie integrates well with PayPal and Stripe for free, so you only pay the standard PayPal or Stripe transaction fees.

If you rely on accounting reports for insight into your performance, SlickPie wouldn’t be a strong choice. We suggest you consider one of our other picks, since SlickPie didn’t appear to offer any built-in reporting capabilities.

5. GnuCash

GnuCash is an open source desktop software—the first desktop option on our list. It offers support on Android via the GnuCash app—you’ll find it in the Google Play store—but offers no iOS support yet.

GnuCash supports multiple OS and works across 21 languages and multiple currencies.

This free accounting software is packed with features, and offers support straight out of the box. Following the GnuCash setup prompts will walk you through setting up accounts and item lists via the landing page.

Users have the flexibility to load any accounts—cash, bank, credit card, CU, A/R, and Assets. The same goes for liability accounts, income, and expenses. Impressive!

Desktop accounting software has its benefits and drawbacks. One of the major drawbacks is the risk of data loss. If your computer dies, for example, where has all your data gone? One of the benefits is being able to keep multiple backup files, and restore a file from weeks ago if something goes wrong. This is where GnuCash excels. It runs a backup process each time you save your data file, plus you can set the system to automatically back up your data at a set time or at set intervals. The peace of mind this gives is a huge win for GnuCash.

Pros:

• Payroll
• Full reporting features—cash flow, income and expense, income statements, trial balances, general ledger, vendor reports and receivable aging are all fully supported
• Full accounting features
• Import customizable data from bank, Quickbooks, MS Money, and HBCI files.
• Online tutorials
• Migration guide for moving all financials from another software
• GnuCash wiki for more advanced users
• Can be used for personal and business finance

Cons:

• Confusing installation process
• Because there is no online integration, you may need to check with your accountant to make sure you are meeting reporting requirements

The bottom line

If you’re looking for a fully functional desktop accounting software—and a free one—you can’t go passed GnuCash. It offers strong features and all reporting options, and it’s simple to use. Just be certain to stay on top of your reporting and tax requirements, as this is an offline software. That means it doesn’t give notifications if you’ve missed certain milestones.

6. xTuple PostBooks

xTuple Post Books is a highly adaptable ERM software with good scalability. It’s more than just a business accounting software—it packages everything you need in an enterprise resource planning system. If you need access for four users or less, you can use its CRM, accounting, and productivity features at no cost. An ideal choice for very small teams, this software consolidates all your communications into one place. It manages inventory well, and can expand with your business as it grows.

There are countless small business accounting solutions on the market—xTuple PostBooks shines in the level of support it offers. There is a library of plug-ins and integrations to help streamline all aspects of your business. The optional extras are tailored to the paid version of xTuple, which you’ll need if you need to give access to more than four users.

Installation is simple, but the many customization options will take time to work through if you want to take advantage of them.

Pros:

• Full enterprise resource planning (ERP) system
• Feature rich
• Operates on all platforms—Windows 8, Linux, and Mac.
• Strong user support—forums, documentation, and phone/chat support.
• Wide range of features for small to large businesses

Cons:

• No option to add multiple users at a time
• Costly if you upgrade to the paid version
• Steep learning curve

The bottom line

xTuple Post Books can be challenging for first time users, but if you are committed to using it in your business long-term, it’s well worth the learning curve. This feature-rich ERM software allows you to track purchases, CRM, and sales, create a customer web portal, and streamline all aspects of distribution processes. If you’re a very small business or sole trader, there may be many functions that you won’t need. Fortunately, xTuple Post Books is extensively covered and reviewed online, so you’re likely to find a review from someone with a similar business to your own.

7. CloudBooks

CloudBooks—as the name suggests—is a cloud-based business accounting software to support small businesses in the basics of account management and project management.

CloudBooks free accounting software gives you the freedom to add unlimited users, create projects, track time and expenses, send professional estimates, and create invoices. There is a caveat—you can only send up to five invoices per month, and there is no customization for your invoices, unless you upgrade to the paid version. If you want to add online payment capability—for PayPal or credit card—you’ll also need to opt-in for the upgrade.

The free version of this small business accounting software can help boost productivity. It allows you to track where (and how) users spend their time—meaning more accuracy in time-based invoicing. You can view a snapshot of your expenses in real time, and add these expenses to invoices with just a few clicks.

Your administrator has a lot of flexibility with this software, too. Permissions can be assigned to specific users, which gives you control over exactly who can generate reports and adjust invoices.

CloudBooks positions itself as a free software for individual freelancers, and offers tiered pricing to manage your accounting expenses throughout your business’s lifecycle.

Pros

• Intuitive and responsive interface
• Good functionality for freelancers (except for invoice limit)
• Cloud-based: use it across any platform, from anywhere you have WiFi
• Simplifies billing, time tracking, and inventory control

Cons

• Limited to five invoices per month with free version
• Requires WiFi to access

The bottom line

This is a great beginner business software for solo artists who just need to track the basics well. As you grow, CloudBooks can grow with you through its tiered pricing. Customer support is reasonable, with clear phone and email contact details, and a large support library online.

8. Zoho Invoice

Zoho Invoice is fairly unique amongst the options we’re exploring. It’s primary function is automating the invoice workflow. Zoho Invoice has been around for over a decade, and as an invoicing software it is unbeatable. Customize your invoice templates and utilize auto-schedule and recurring billing features with this sleek and responsive software.

With its free iteration, Zoho lets you send unlimited invoices to up to five customers through a single account. Customize your invoice templates, track your expenses, and manage basic customer relationship profiles directly. You can integrate time tracking if you require it for project management.

Pros

• Top mobile support across multiple platforms
• Fully customizable invoice templates
• Excellent invoicing functionality
• User friendly
• Strong customer service
• Multi-currency support
• Multi-lingual settings

Cons

• No inventory control
• Limited to 5 customers on Zoho’s free version
• Limited to one user

The bottom line

If invoicing is the pressure point in your business, Zoho Invoice is absolutely worth considering. It also offers basic expense and income tracking, CRM, and project management, if you require the additional functionality.

9. NCH Express Accounts

NCH Express Accounts is available across PC and Mac, and supported on both iOS and Android. If you’ve got less than five staff members, you can get this desktop accounting system for free—almost without limits or restrictions.

Use NCH Express Accounts to manage invoicing, create professional looking quotes, set up automation in your recurrent accounting processes, and generate reports. You can comfortably support your small business accounting needs from this one workspace. We counted around 20 financial reports, and there is capability to run financial analysis on items and customers.

Remember how we said almost without limits or restrictions? In order to access your books online and across multiple devices, you need the cloud version of NCH Express Accounts—this is only available to consumers as a paid upgrade.

Pros

• Fully functional basic accounting
• Scalable—at a price
• Strong reporting capabilities
• User friendly
• Fast setup

Cons

• No time tracking or payroll
• No multi-currency feature
• Only available for free as a desktop software

The bottom line

True to its name, NCH Express Accounts gets your business up and running fast. This business accounting software offers the accounting basics, but is best used as a tool for monitoring your business health.

Essentially, NCH Express Accounts is good for invoicing and quoting, and to track your income and expenses. If you don’t need flexibility and online access, NCH Express Accounts might be a top basic choice for your business.

10. Brightbook

The creators of Brightbook have focused on creating a functional desktop-based accounting solution for freelancers and contractors. If you are the sole employee of your business, Brightbook could be worth a closer look. While it’s not a comprehensive accounting package, it can perform the basics of invoicing, tracking income and expenses, and reconciling your bank statements.

Pros:

• Multi-currency
• Easy to convert quotes to invoices
• Unlimited invoicing
• Clean user interface
• Free
• Easy to apply tax and discounts

Cons:

• Limited to desktop on free version
• Limited reporting

The bottom line

If you’re strapped for cash and looking for a basic invoicing system, Brightbook can meet your needs. This is an ideal option for sending sleek, professional invoices in any currency and getting a quick snapshot of your small business. Another software that doesn’t support mobility, you’ll need to upgrade if you want to check your business’s health on the go, or away from your PC.

…

There we go—10 totally free accounting software for small business. Now that we’ve explored the best options out there for small businesses on a small budget, there’s just one more thing:

Are you sure that free accounting software is really what you want?

If you’re on the fence, this next section is for you.

Totally Free Accounting Software: Is It For You?

We’ve unpacked a lot through our list of 10 totally free accounting software models. Did you find one that’s perfect for your business?

When we talk to business owners about their free accounting software, there are some common concerns. “I like it, but I wish it had…” is a line we’ve probably all used at some point.

Don’t get us wrong—free accounting software is awesome. Slimming down your expenses can be so satisfying. And if you’re going down this road, you’re not alone.

If you’re more freemium than premium, it’s important to be prepared for what you may be missing out on. Here are some features you might not find in free small business accounting software.

When you’re analyzing your potential savings, remember that it’s not savings if you’re spending that capital on a bookkeeping backup, consulting support, or (we don’t even want to say this part) tax fines. If you can work the freemium system without compromising the quality of your financial management—congratulations! Your account is looking healthier already.

1. Tax Functions

Most premium cloud-based software offers tax support for your business. These can integrate with your payroll and connect directly to your government tax department, if you choose.

2. Advanced Financial Reporting

Free accounting software generally offers entry-level management reports. If you need more than that—data visualizations, graphs, or custom reports—you may require something stronger than entry-level capability. How much this matters to you depends on how much insight you need.

3. Inventory and Order Tracking

If you manage inventory, this is going to be a pivotal decision. Look carefully into any software you choose—whether it’s free or paid—and make sure it delivers the level of tracking you need.

4. Forecasting ; Budget Management

Are financial strategy and planning for future growth a focus for your business? If that is where you are in your business’s lifecycle, you will want to see what level of forecasting your free software offers. Does it offer any at all? If not, you might want to reconsider your decision to go freemium.

5. User or invoice limits

You might have noticed that many of our 10 totally free accounting software options put limits on how many users you can add. We’ve noticed that four users (or less) is usually the threshold between free and paid membership. So, how many users will need access to your software initially? Maybe you’re thinking you’ll just add supervisors, or managers, or a couple of key staff. That’s fine short-term. We do suggest that you choose what works for you—not bending or moulding your business to suit your software.

The same goes for invoice limits. It might work in the short-term, but plan ahead. Do you want to be generating hundreds of invoices per month at some point? Then check how much that will cost you with the software you choose.

Looking at what we’ve just run through, maybe you’re having second thoughts.

We know you want the absolute best for your business—it’s why you came here. But free is the magic word for many of us, right?

Can I make a suggestion?

Totally Free Accounting Software: The Free Trial

There are 30-day free trials for most of the premium accounting software packages. Fresh Books, QuickBooks, MYOB, Sage—they all let you try out their offerings. Taking one of these for a test-drive before you settle on your final choice can help you decide what works best for your business.

Can you justify a monthly subscription for the features you actually used? Can you do without the tax assistance, payroll integration, or strategic reporting? Only you know the answer. When you know the answer, you can be confident you have made the strongest choice for your business.

2 to try

Fresh Books

Key Features:

Easy and stylish invoicing with full customization and branding. All expense trackers are available to you, and everything is classified clearly. Project collaboration and online payments are simple, and the dedicated mobile app is user friendly and responsive.

If you love it in 30 days:

The Lite option currently costs $15/month and allows you to have up to 5 customers. If you have up to 500 customers, Fresh Books will set you back $50/month for Premium membership.

QuickBooks

Key Features:

Strong project management, easy invoice management, and tracking in every aspect of a modern business—these are the strengths QuickBooks bring to the table. You can also manage contractors and payroll, and allow staff to submit receipts via photo from the cloud-based app.

If you love it after 30 days:

The Simple Start plan is $6/month. QuickBooks claims its most popular plan is QB Plus, at $21/month. It supports up to 5 users.

Totally Free Accounting Software: The Wrap Up

We all want the best free accounting software for small business, but with the number of accounting solutions on the market it’s hard to know what exactly the best is. If you’re not prepared—or not able—to spend your cold hard capital on tracking your business performance, totally free accounting software automatically puts it ahead of the rest.

If you’re committed to seeing what free accounting software has to offer, we hope this list has given you some strong contenders to consider. What works best is as individual as your unique business. Don’t forget that you’re the one who has to implement the system, so be sure to go for something you’re willing to invest some time in setting up. Because let’s face it: any accounting software is only as good as the data you feed it.

If you’re looking for a way to save money, we all know there are good way—streamlining productivity—and bad ways—compromising the quality of your products. Free accounting software that supports your small business can stand firmly on the good side.

The post 10 Totally Free Accounting Software for Small Businesses appeared first on Lending Valley - Trusted Merchant Cash Advance Company.

Veterans continue to talk in glowingly positive ways when speaking of the Patriot Express Loan, and while it is no longer a viable option for veterans exiting the service today there are a number of other lending options available through the US Small Business Administration to fill in the gaps and guarantee that veterans get the funding they need to be their own boss and grow their own business.

Below we highlight what made the Patriot Express Loan such a popular opportunity as well as touch on a number of key lending options still available to veterans that can qualify through the SBA 7(a) Express Loan programs.

Let’s dig right in!

A Quick Primer Regarding the Patriot Express Loan Program

In 2007, the US Small Business Administration made the decision to make a pilot program available to US veterans, calling it the Patriot Express Loan – a part of the SBA 7(a) financing services available through this governmental body.

Differing from traditional SBA loans available to any US citizen and business owner that qualifies, this loan package was specifically intended to be used by veterans as well as other military members that qualified so that they could get the funding needed to establish a new business or grow an existing opportunity.

The idea here was to make sure that our veterans at every opportunity to hit the ground running when they exited the service with financing in place to start a new business or to grow a business that they had already been working on. The SBA understood the sacrifice and the commitment these military members had already made in service to our great nation and wanted to be sure that there was a way they could recognize that officially.

All veterans and eligible military members that were able to meet the qualification requirements were able to access lending packages good for up to $500,000 as part of the Patriot Express Loan package.

The funding accessed through this type of lending package could be used for pretty much any business-related purpose imaginable, which made it very attractive on its own, but it was the speed in which approval times were handled that made the Patriot Express Loan opportunity really enticing.

The traditional SBA turnaround time is almost glacially slow (and for good reason in most cases). But the Patriot Express Loan package had a much faster turnaround time designed to get funding in the hands of our veterans as quickly as possible – and at very favorable rates.

In fact, it was possible to enjoy ridiculously low interest rates of between 2.25% and 4.75% above the prime rate (depending of course on the amount of the loan as well as the overall repayment terms). These kinds of interest rates were certainly not the norm from the SBA at that time.

The popularity of this lending opportunity happened almost overnight, and between 2007 and 2012 more than $703 million in lending packages were guaranteed through the Patriot Express Loan program from the US SBA.

Unfortunately, when the SBA started to dig deeper into the data and analytics behind the success or failure rate of these loans they uncovered the fact that default rates on Patriot Express Loan financing was significantly higher compared to other SBA packages.

The US Government Accountability Office corroborated these findings, discovering that one out of every five veteran business owners that borrowed $25,000 or less were unable to repay that loan later down the line.

The SBA was forced to shutter the program permanently because of costs overriding the income that was able to be brought in. These financing packages ceased to become available to veterans in 2013.

Current SBA Patriot Express Loan Alternatives

Though it is no longer possible to take advantage of the SBA Patriot Express Loan scheme (a disappointment to be sure) there are still quite a few different SBA options available for veterans to take advantage of.

The SBA recognizes that there are more than 2.5 million businesses in the United States today owned in part or in whole by military members and they still want to make sure that our veterans gain access to the funding that they deserve.

Here are just a couple of the most popular financing options available on the market today.

The Military Reservist Economic Injury Disaster Loan Program

This lending program is designed to fill in some of the gaps left behind by the Patriot Express Loan package disappearing.

Providing funding to small businesses that have suffered some sort of economic loss because of core employees called up to active duty after being part of the military reserve, these programs are engineered to help businesses meet overall operating expenses until they are able to return back to normal when the reservist returns home from active duty call ups.

These kinds of loans can be taken for up to $2 million, though individuals will have to provide some sort of overall collateral on any lending package that’s going to exceed $50,000. The good news here is that the interest rate is locked in at 4% and small business owners will be happy to know that they have up to 30 years to repay the entirety of the loan (with zero repayment penalties for early payment, too).

At the same time, small business owners looking to leverage this lending opportunity will want to understand that these loans are not designed for handling anything outside of working capital demands. You won’t be able to leverage this loan to start a business, won’t be able to expand your base of operations with this lending package, and cannot refinance other debt with this loan the way you might be able to with other opportunities.

On top of that, before you’re able to leverage this loan your business will be analyzed to determine whether or not it can fund its own recovery even after the reservist has left for active duty. If this is found to be true the financing package will be denied.

SBA 7(a) Lending Packages

There are a variety of different Small Business Administration loan packages available under what this organization classifies as their SBA 7(a) scheme, giving you ample opportunity to find the right lending solution for your specific needs as well as one that you fit the key criteria for.

While many of these lending packages are designed for small business owners that want access to working capital there are financial packages here that have much more flexible funding sources for those that want to make upgrades, want to acquire other businesses, or want to expand and grow outside of the traditional working capital restrictions.

The standard lending package under this financing scheme gives you access to up to $5 million in financing, provides low interest rates that cannot exceed the overall maximum established by the SBA, and will not require any collateral for loans good for up to $25,000.

The SBA 7(a) Small Loan financing package provides many of the same benefits as the standard offering, with the sole exception being that you will be able to borrow up to $350,000 compared to the $5 million you could receive with the larger package.

The SBA Express Loan also provides funding good for up to $350,000 but it also provides an average approval turnaround time of about 36 hours or less. This is a fantastic alternative to the Patriot Express Loan that is no longer available exclusively to veterans.

Export Express Loans from the SBA are good for up to $500,000. They do require collateral depending on different lending standards and enjoy an approval turnaround time of about 24 hours or less. These kinds of loans, however, are designed exclusively for businesses in the export world.

Export Working Capital Loans provide up to $5 million in financing, share most of the same requirements of the Export Express lending packages from the SBA, and are again designed exclusively for export industry businesses.

Finally, you have the International Trade financing opportunities from the SBA. You’ll be able to again borrow upwards of $5 million, will have interest rates that vary but will never exceed the maximum established by the SBA, and you can expect a turnaround time of between five and 10 days here. These loans are exclusively for exporting businesses, too.

SBA 504 Financing Packages

Though the SBA 7(a) financing scheme is definitely more popular and more widely taken advantage of there are other SBA financing programs that veterans (and non-veterans) can choose to take advantage of.

The SBA 504 financing packages provide you access to funding for:

• Purchasing real estate for your business
• Purchasing land and land improvements for your business
• Building new construction for your business
• Investing in long-term machinery upgrades for your business
• Refinancing debt you’re already carrying to expand or upgrade your business

These kinds of financing packages provide you with up to $5 million in lending with an opportunity to repay these loans over a 10 to 20 year timeline. Interest rates are fixed when you take advantage of these kinds of loans, with overall rates based entirely on the current market rate for five and 10 year treasury issues.

The only sticky thing here is that you’ll have to put down at least 10% of the total loan you’re looking to secure through the SBA 504 package (and maybe even more if you’re a new business or a specialty business).

SBA Micro Loans

The SBA also provides access to SBA micro loan packages, providing financing good for up to $50,000 to businesses that want to either start or expand the business of their dreams.

While up to $50,000 is available to anyone that applies for these kinds of loans the average most people shoot for is about $13,000, plenty of money to bootstrap a new business and build or grow it later down the line with access to even more financing.

The beauty in these SBA micro loan packages is that they can be used in a variety of different ways without a lot of restriction. You can use these loans for pretty much anything business related except for purchasing real estate or paying off debt that your business has already incurred.

Qualifying for SBA Veteran Loans

There are a handful of things you’re going to want to focus on when you go to apply for SBA veteran loans that increase your odds of approval.

For starters, you’re going to want to make sure that you apply for these kinds of lending packages with a minimum credit score of 650. Larger SBA loans (the ones closer to the $5 million upside available) are going to require credit scores of 675 or even a little bit higher most of the time.

On the flip side of things, you may be able to get SBA microloans with less than picture-perfect credit – using them to build your credit – and then go after larger loans when your credit has been improved.

Secondly, depending on the loan you are going after you may not be able to apply for a lending package through the SBA until you have two or three years in business already. You’re going to need to consider these requirements before you apply for specific loans as not meeting this business life threshold may disqualify you instantly.

Verify other eligibility requirements on different SBA loans, too.

Almost all of the SBA packages (particularly those in the SBA 7(a) category) are going to have different types of requirements that you’ll have to meet for your approval to go through. All of these requirements are going to be stated upfront and with a lot of clarity so that you know what you are getting into before you begin the application process.

Lastly, you’ll want to make sure that you have a strong business plan in place and that you have access to collateral if it’s going to be required. As long as you take care of all of these details before you go through the application process you shouldn’t have anything to worry about.

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Moo business cards offer super eye-catching papers and a color print that provides brilliant clarity alongside the ability to customize your templates.

You can choose the type of paper or card you require – ranging from premium through to ultra-luxurious, which includes original, cotton, super business and luxe business ranges. You then select the size you’d like, all the way from “MOO-sized”, square and mini business cards; so you can choose the ideal format for your particular company requirements. Following on from this, you can even select which finish you’d like. Moo offers a gold foil, silver foil, spot gloss or raised spot gloss finish.

Once you have established the card quality, size and finish of your business cards, you can then decide whether or not you’d like to have Moo help design your business cards if you’re not a creative professional or you don’t have one available to you. Moo provides templates to suit every need and every level of design ability. On the “Use our templates” tab you can look for inspiration, ask for a professional design, or opt for a simple ; speed customization. If you’d like to submit your own design or design your graphics right there and then on site, you can opt for the “Design here online” tab, where you can provide your logo, easily create your own design and then get down to the nitty gritty and customize each detail. This means that you’ll be starting with a blank template and adding all your graphics and info to it.

But what if you’ve already got a complete, finished design and you merely want to have it printed on cards? Then simply choose the “Upload a full design” tab because you’ve already got your design, have your own designer or you’re just super confident about your layout.

It may be that you need to have business cards printed for more than just one person? If this is the case, you click on the “Ordering for 10 or more employees?” tab where you’ll be offered some favorable discount pricing for a bulk order.

So Why Choose MOO Business Cards?

Printfinity

MOO business cards give you the option to print a different design on the back of all your printed products, and they’ve given it the nifty name of “Printfinity”. They charge no extra fees for this, it’s really easy to set up, and is an option that is available for all of their print products. Oh, and they also boast the fact that they’ve been given the “Queen’s Award for Innovation” for this little feature! Guess there aren’t many online printing companies that can tell you that?

So how does all this work? Well, you simply choose your product (they also do stickers, but that’s another story), your paper stock and your size. You then set up your design, select your images or you can even pick one of their off-the-peg ones. You then use their easy online design tools to finish your project. Moo then lets you know how many of each design you’ll receive in a pack, and uses its unique “Printfinity” tech to print and dispatch your printed products straight to your door.

Free full-color printing

Business cards from Moo can be printed in full color on both sides of your business cards. This is a feature that not all business card printing companies offer. Moreover, Moo includes this in the price – always.

The MOO promise

Another endearing notch in the advantages bedpost for Moo is that they promise to “move heaven and earth to make you happy – or your money back!” and they even go as far as to say that they are “not happy until you’re over the MOON.” See what they did there?

As far as Moo is concerned, they know that a lot of companies brandish the “satisfaction guaranteed” banner, but Moo would much rather that you were totally and utterly “THRILLED with your order. So they go to painstaking efforts to ensure that this is actually the case.

Once you have placed your order, they will contact you if they establish any issues. And if you notice a problem, you can let them know too. From the smallest typo through to a major design amendment, they offer to fix any of these issues free of charge.

Another boon is that they don’t outsource their printing. They print virtually all the orders themselves in either their UK or US branches. This gives them total control over the whole order chain – from receipt of order through to dispatch of your lovely Moo business cards.

Each order is packaged manually by a human – no robot technology! If they spot an issue, they will reprint the whole order. They are not happy to send out your order until it has been given the final seal of approval and a majorly large thumbs up.

Once your order reaches you, if you’re not totally thrilled you can get in touch with Moo and they’ll fix the issue. If they still haven’t managed to make you smile, they’ll even give you your money back! If you have any issues throughout the ordering process, the Moo site offers a “Chat ; Facts” button where you’ll find a human being to have a chat with – they don’t offer automated robotic chat. Phew!

Next Day Business Card ; Postcard Delivery

If you order your business cards before 12pm BST, they’ll be with you the very next day (except weekends and holidays) provided you are ordering from the UK or an EU country. Most of the Moo business card designs are available for this service, including standard formats, square business cards, medium postcards and the small A6 postcards. We think this is a fabulous advantage for businesses who might need to print off some business cards quickly and efficiently for a trade fair or special meeting.

The MOO Difference

Moo are a fan of good design, and they believe that it plays a significant role in every business. They can offer as much support as you require to make sure you have a winning design. And they also boast an “award-winning” team of print experts to assist you.

So, with MOO you get the best quality papers (premium through to super-fancy papers and card with an impressive range of paper stock that includes “luxe” and shiny, and even metallic opalescent). They offer lovely “touchy-feely” finishes too, in case you want to add some extra texture or some shine to your business cards so that they stand out from the usual business card crowd. They even offer spot gloss and gold/silver foil finishes for that very reason too.

In just one pack, your business cards can include a different design on every single item – on the back and the front – at no extra cost. This means you can print off a range of product images or graphics to maximize your client reach.

If you have in excess of 10 employees for whom you want to print out business cards, Moo business cards offers you special discounts, your very own ordering platform, and even your own account manager – now that’s what we call service!

If you’re still not convinced of the Moo service package, then you can have a free sample pack sent to you. This gives you the chance to see the quality of the card and paper stocks, and feel those extra-special finishes (especially if you’re not sure what a gold or silver foil print might look like, for example).

Pros

• Great choices ; stylish card templates
• You can order alternate images in a single order
• Beautiful and versatile stock and finishes
• Speedy service ; excellent shipping packaging
• NFC card option
• Great in-house design
• Fantastic customer services

Cons

• Can be some fluctuation with print quality
• Some “fuzzy” images have been reported
• Higher price
• Some of the templates don’t enable sufficient customization

Conclusion

Moo business cards really are one of the most top-notch business card printing services, offering sophisticated design templates and really high-end options such as NFC cards. That said, its online editor system is a little more particular that some of the competitors, and the prices are higher.

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So where do we get the liquid cash required to successfully ride out these situations?

We’ve got a few ideas, and we’ll break them down for you right here. We’re also going to explore how different emergency lending options work, so you can make the right choice for your situation.

And since the keyword here is probably emergency—we’re going to do it fast.

The Basics of Emergency Business Funding

If a fast injection of capital is on the cards, you’ve got 4 main options:

1. Invoice financing
2. Short-term loan
3. Medium-term loan
4. SBA Disaster loan

Bonus: the one emergency business loan you should probably avoid.

Emergency Business Loans: What they are (and when to use them)

Invoice financing / Invoice factoring

When you don’t have enough cash on hand, invoice financing companies pay for your outstanding invoices.

Generally, they advance you a percentage (usually around 80%) of your unpaid invoice amounts. Once your clients pay you, you get the withheld percentage less lending fees. Simple. Fast, too. The time from when you submit a completed application until the time the cash hits your account is normally between 2 and 7 days.

But this type of emergency business loan can be costly. At its most fundamental, you lessen your future earnings in exchange for immediate capital.

Best when…

Your cash flow has temporarily reduced to a dribble because clients haven’t paid you yet. Of course, you need to have unpaid invoices on hand to use this type of financial service.

Where to look…

You can get your application started right here. Dig deeper into the pros and cons, see a list of the documentation you’ll need, and get some fast facts and figures to help you determine if your business is a good match for invoice financing. Receive a maximum advance of up to 100% of the invoice value, with a factor fee of between 8-30%. Turnaround time for a successful application can be as low as 24 hours.

Short-term loan

When we talk about short-term same day loans, we mean loans where the repayment terms are within 12 months, and the application process is usually online. If your application is successful, capital usually hits your account within 1 – 3 days.

Short-term loans are likely to require you to go through a lender other than your bank. Alternative lenders aren’t subject to the same strict regulation as your bank, so they aren’t as limited in their administrative requirements. Paperwork, basically—they don’t need you to do as much of it.

They don’t usually charge an interest rate, due to the accelerated repayment terms. They charge a flat fee worked out on the amount you borrow. If you’re borrowing $10,000, for example, and their fee is 20% —not unheard of—your total to repay is $12,000. Repayment intervals can be daily or weekly, and are always by direct debit from your business bank account.

Best when…

You need a fast injection of capital—a big event just rolled into town and you need to boost inventory or staffing levels to capitalize. A short-term business loan is a quick, streamlined solution to a temporary cash flow emergency.

Where to look…

Get more information and kick start your loan application process here. Loan amounts range from $2,500 – $250,000 as a lump sum cash injection, with payment terms from 3 – 18 months. With interest rates starting at 10%, and funds in your business account in as little as 24 hours, a short term business loan could be a few clicks away.

Medium-term loan

When it comes to sourcing an emergency business loan, everyone crosses a traditional loan off their list. The lending process is too long. This is where alternative lenders—specifically online alternative lenders—step in.

If a short-term loan can get your business back in the black lightning-fast (usually within 72 hours), the catch is that your business has to repay the loan fast, too. A medium-term loan doesn’t pay out quite as quick, but the repayment terms are more manageable. Having said that, some lenders have been known to activate funding within 48 hours.

The beauty of a medium-term business loan is that its rates tend to be lower than some of the other emergency business loan options. A medium-term emergency business loan aligns more closely with a standard loan structure, and is a good option for businesses with a track record of strong financial performance.

Best when…

You run an established business with a solid financial history, and have a strong personal credit score.

Where to look…

This is the best place to get a head start on your medium-term emergency loan application process. Learn more about it, explore the pros and cons, and get to know the approval process. Loan amounts range from $25,000 – $500,000 over a 1 – 5 year term. Interest rates can vary, and you could have fresh capital in your business as soon as 2 days from now.

SBA Disaster Loan

An SBA Disaster loan gives eligible businesses the working capital they need to repair their business after a certified emergency. An SBA Disaster loan can be used to repair buildings, replace company vehicles and equipment, restock lost inventory after a disaster. The eligibility requirements for this type of emergency business loan are strict, but the terms are generous and it is highly recommended that you take the time to apply.

Best when…

Your business is recovering after being destroyed by a natural disaster. Your business must be located in a certified disaster area for your application to be considered.

Where to look…

The U.S. Small Business Administration administers the SBA Disaster loan. Learn more about it here.

And now one to consider (but probably avoid)…

Merchant Cash Advance

A merchant cash advance (MCA) gives you a lump sum cash infusion in exchange for a percentage of your daily credit card sales. Technically, it’s not a loan. It’s the sale of your future income.

MCAs have a fixed fee—if this were 30% you’d repay $13,000 on a $10,000 loan. MCAs offer the same ease of application, simplified eligibility terms, and fast turnaround times. The difference is that your repayments are based on a percentage of your daily credit/debit-card sales. The MCA agent collects this percentage until they’ve recovered your loan amount and fixed fee. If your sales are slow, it will take you longer to settle the loan.

None of this on its own would raise a red flag.

But MCAs are the most expensive way to borrow money.

Let’s say your credit card sales are strong. The dollar amount the MCA company takes will be higher, and your loan will be paid of faster. There is no benefit to this for you—you’ve already been charged a fixed fee, regardless of how long it takes to repay your loan. Your cash flow, however, will be impacted by the reduced income from credit card sales in the short term. Effectively, taking on an MCA is likely to create a long-term cash flow issue to ease a short-term one.

Best for…

Keeping as an absolute last resort.

Where to look…

You can learn more about the MCA process here, including the loan range and estimated wait time until funds hit your business account.

Same Day Business Loans: How to Prepare

Now that we’ve explored your emergency business loan options, hopefully you’ve got a clear idea of which path you want to explore if you want the business loans the same day or the next day. Before you submit an application, there’s just one more piece of advice we’d like to offer:

Get all your ducks in a row.

Here’s how you do that:

1. Calculate how much capital you need.

This is always the first step, and probably something you’ve already done. It’s important to get it clear, and spending a little time on it now will save you from getting caught up in the application process later.

Many lenders and loan types have a set loan range. Knowing how much cash you need will help you rule out any lenders who don’t loan that amount, before you waste time on an application. Never more so than in an emergency, you can’t afford to burn time unnecessarily.

2. Then work out when you need it.

This is probably another step you’ve already completed. The longer you have before this emergency becomes mission-critical, the more funding options could be open to you.

3. Calculate how much you can afford to pay.

Don’t take on more than you can afford. Work out an ideal monthly payment scenario, a worst case monthly repayment scenario, and how much you can afford to pay in interest.

4. Calculate which market option aligns with steps 1, 2, and 3.

First, run some comparisons between the different emergency business loans that fit your situation, and different lenders within each.

Set your priorities according to which of these lenders can offer the most ideal repayment terms for your business situation.

The key is to research all your options.

Research, research, research. There are countless emergency business lenders out there, but the quick capital infusion needs to work for the future of your business—not just provide a Band-Aid for today.

Second, understand what type of emergency business loan you qualify for.

Is your credit score strong?

Has your business established a history?

Has it established a good financial record?

If so, you may find yourself well positioned to apply for a medium-term loan. If you are a new startup, or have a lower credit score, you may only qualify for short-term loans. But don’t be discouraged. Knowing where you stand from the outset will prepare you with a more realistic idea of what to expect as you move through the application process.

Pro tip: One of the easiest ways to get clear on your repayment abilities is by calculating your debt service coverage ratio: Cash flow / Loan payment = Debt service coverage ratio.

Your debt service coverage ratio (DSCR) is factored in by lenders, alongside your eligibility and the current economic climate. Ideally, you’d like it to be around 1.15, but many lenders will still accept a DSCR of 1.5.

5. Get your paperwork straight.

Prepare all the documentation you’re likely to need. Have your figures in front of you. If your business emergency needs a cash infusion yesterday, you need to get that application completed accurately and quickly. Although unlikely, some lenders may request more information after you’ve submitted your application. If that’s the case, get it to them fast.

There are some basics that it pays to have prepared in advance. These can include:

1. Desired loan amount
2. Loan purpose
3. Personal credit score
4. Business credit score
5. Time in business
6. Business plan
7. Industry
8. Entity type
9. Business licenses and permits
10. EIN
11. Proof of collateral
12. Annual business revenue and profit
13. Bank statements
14. Balance sheet
15. Personal and business tax returns
16. Copy of your commercial lease
17. Disclosure of other debt
18. A/R and A/P Aging
19. Ownership and affiliations
20. Legal contracts and agreements

Depending on the type of emergency business loan you apply for, you may also need to provide details of your:

1. Time in business
2. Personal credit score
3. Business credit score
4. Annual revenue (or monthly sales)
5. Bank statements
6. Business tax returns
7. Purpose of loan

6. Consider Using an Online Marketplace

Typically, online lenders can connect you with a greater variety of funding options. You will also gain access to lower rates. The crucial point, though, is that using online lenders saves time. You can submit applications to multiple lenders, and you don’t have to wait for an appointment time. When time is of the essence, online marketplaces beat a bricks-and-mortar bank.

Emergency Business Loans: The Wrap Up

We know you’re in a rush and need the business loan the same day. And being short of working capital when you’re trying to grow your business is disheartening. But try and slow down for 2 seconds, because this part is important:

Take the time to find a strong lender. Do your homework to ensure that this quick fix is the best option for your business.

With our access to online lending and hundreds of options at our fingertips, it’s easier than ever to get fast funding. You can do this. The trick is to consider emergency business loans that boost your business, not slow it down.

The post Emergency Business Loans: Get Funding the Same Day! appeared first on Lending Valley - Trusted Merchant Cash Advance Company.

Dun & Bradstreet (D&B) is the oldest credit bureau in the US and so, only deals in business credit and is usually the one-stop-shop credit agency for the federal government and various other high-volume lenders. However, how do you actually get your D&B scores?

As you might be aware, business credit operates differently from personal credit. Unfortunately, you are not entitled to a free business credit report every year, nor are lenders obligated to let you know if they did not accept you due to your business credit score (or lack of). It can be a pretty difficult task for many businesses to decipher their business credit, especially for a multi-faceted rating like Dun & Bradstreet’s.

The credit rating process with Dun & Bradstreet can be split into two separate scores which lenders have at their disposal to evaluate a business’s creditworthiness. What are these two ratings? They are the Dun & Bradstreet rating and the D&B PAYDEX score. Both of these ratings work together to tell lenders about a specific business’s credit risk.

Dun & Bradstreet Rating

As a business, your Dun & Bradstreet Rating is generated based on the financial information you provide to them. The more you give (and the more accurate it is) the easier it will be for Dun & Bradstreet to award you a relevant rating.

This score is there to estimate your business’s creditworthiness by taking into account the number of employees you have, how long you have been in business, your credit history and your company’s overall net worth. It provides lenders and potential business partners with a very clear and quick way of establishing profitable options and any risks that aren’t worth taking due to bad debt and poor cash flow.

Dun & Bradstreet PAYDEX Score

In line with the above rating, Dun & Bradstreet also creates a PAYDEX score to rate your business’s creditworthiness further.

Even though the D&B rating sounds far more like a traditional credit score, the Dun & Bradstreet PAYDEX better represents what people imagine when they think about credit ratings. This score does not take your employee number, business size or total capital, instead it focuses on how quickly and efficiently your business pays back lenders.

How to Get My Scores

Now, there are a few steps to acquiring your Dun & Bradstreet Rating and PAYDEX score.

To start with, you, as a business owner, will need to create your free D-U-N-S Number. Your PAYDEX score does not even exist until this number is generated for you. What is this number exactly? Well, it is a nine-digit business identifier that is assigned to you when Dun & Bradstreet have decided that you are unique from the other companies in their Data Cloud.

Furthermore, this identifying number is as the first port of call for your Live Business Identity which is the most consistently updated view of any particular company in their aforementioned Data Cloud. Plus, it will be referenced by potential lenders when they are trying to work out the financial stability and reliability of your business.

Once you have you have your own D-U-N-S Number, you can start to have a look at your D&B Rating and PAYDEX score by registering for D&B’s CreditSignal. This is a free service that will automatically alert you when (or if) your business’s credit score changes. Plus, you can even pay to see your full reports if that is necessary.

The benefits of knowing when your credit score changes and if any inquiries about your business’s credit file have come in are vital to running your company effectively. What are these advantages? Well, being in the know about all things credit-related can help you to:

• figure out whether your business’s activities have affected your overall credit rating.
• keep an eye on the number of times your business credit file has been looked at.
• understand when you need to do something to help improve your business credit.
• estimate partner and/or lender’s reactions to any changes that have occurred in your business credit file.

There are also additional benefits that this free service will bring you, such as:

• Obtaining free alerts when your Dun & Bradstreet scores and ratings (yes, including D&B PAYDEX Score) change.
• Being able to access the CreditReporter mobile app.
• Acquiring a summary every month containing an overview of changes within it.
• Being able to receive email notifications when or if a change to your business credit report happens.

As a business owner, you can also find out your Dun & Bradstreet Rating and D&B PAYDEX score through Nav. If you have a standard account, you will be eligible to receive a D&B PAYDEX letter grade. However, if you have a premium account, you will be able to see your Dun & Bradstreet Rating and your exact PAYDEX score.

Nav is the only source on the market that allows you to access both personal and business credit reports and you can get started completely free — there really is no excuse!

The post Where Can I Get My Dun & Bradstreet Rating? appeared first on Lending Valley - Trusted Merchant Cash Advance Company.

How does asset financing work?

There is a reason why a company’s assets are listed in a company’s balance sheet, and that is because they have intrinsic value. These assets can include anything of value such as:

• short-term investments – government bonds, treasury bills, CDs,
• accounts receivable,
• inventory assets,
• buildings,
• machinery, etc.

For instance, consider a logistics company that transports customer goods in trucks across the country. This fleet of trucks is an asset for the company and can be used to secure a loan. The lender will only need to value the existing assets in order to determine the amount of loan to offer and at what terms. In this case, the fleet of trucks is used as a security to guarantee the loan to be issued, which is asset financing.

However, it is important to note that this is just one form of asset finance, but it should give you an idea of why many businesses use this kind of funding option.

Why do businesses need asset financing?

The main reason why a business may need asset financing is to increase its cash flow. Imagine a company that needs to buy new equipment in order to increase their production. An obvious option is to go looking for the equipment and buying it outright, but this wouldn’t be a smart choice. After all, no one pays 5 years’ worth of rent upfront just because they have the money to do it, so why pay for equipment that way. Furthermore, if a company that could afford to buy the equipment decides to do so, this would have a negative impact on the cash flow. Perhaps the low cash flow will affect other expenses such as purchasing inventory, paying staff, rent, etc. That is why such big companies will almost always prefer to go for asset finance instead.

Another reason why companies opt for asset finance is to raise cash flow quickly. It is not uncommon for a company’s cash flow to dip due to one of many reasons, and the company may need to raise cash flow quickly. Maybe inventory needs to be replenished due to increased demand from customers or maybe some expenses cannot be met. In such situations, the asset finance process is easier and less costly than most other lending options.

Consider a company applying for a business loan to buy equipment, the process would take a long time before approval. For example, the average waiting time to get an SBA loan is between 60 and 90 days. This is because lenders must weigh numerous factors about your business before offering a loan. On the other hand, asset finance is a lot easier because actual assets are used as collateral. That way, the application becomes a lot easier and thus faster to process and approve.

An upcoming business is also more suited for asset finance because it will not be disqualified on the basis of its credit score. Because an asset is used as collateral for the loan, even a company that would otherwise not be approved for a loan can still be funded.

What types of asset finance are there?

All of the examples provided in previous sections involve just one type of asset financing, yet there are different forms of the same concept.

Asset refinancing

This is one of the most common forms of asset finance, whereby assets such as vehicles, buildings, equipment, etc. are used as collateral to secure a loan from a lender. Most businesses use this type of asset financing when they need to quickly raise cash flow to make up employee wages or purchase inventory. It is also a popular option for debt consolidation for businesses.

Since the asset is used as collateral, its value will determine the loan amount that will be awarded by the lender. Typically, the lender will perform a valuation of the asset first and then propose a certain loan amount. Repayment terms for the amount are also agreed upon, and the lender may seize the asset if the terms are not kept.

Equipment leasing

Here, a company rents equipment to use for its business on a lease from a lender for a specified period. Payments are then made periodically as agreed by the lessor and lessee until the lease expires. When that happens, the lessee can either return the equipment, extend the lease, buy it outright or upgrade to a piece of better equipment under a new lease. Throughout the lease period, the equipment is still owned by the lessor, so it is not listed as an asset on the balance sheet. Instead, it is placed in the profit and loss account since payments are made periodically.

It is not difficult to see why many companies would prefer this kind of asset financing, particularly because it allows a lot of freedom. Take the case of the aforementioned logistics company having leased a few trucks for a year. At the end of the year, the company can decide, depending on its needs, whether to extend the lease or not. This is preferable to holding assets that were only necessary for a certain period. In fact, the Equipment Leasing Association of America reports that 80% of companies lease equipment rather than buying.

Operating lease

Also referred to as contract hire, this is very similar to equipment leasing for the lease period being shorter and responsibility for maintenance lies with the lessor. An operating lease, therefore, is best for a company that simply needs to fill a gap in, say, production, but only for a short period. With this kind of asset financing, the lessee is free from responsibility and they can also cancel the lease before the expiry date, although at a penalty.

Other than being a quick fix solution, operating leases are also cheaper because the lessee is not paying the full value of the asset. Similar to the equipment lease too, this lease will not be listed on the balance sheet as an asset but under the P/L account.

Hire purchase

With hire purchase, the lender will purchase the item on behalf of the company seeking asset finance and then will be repaid over a longer period of time as installments. In the end, the item will be fully owned by the company, so this is listed as an asset. Plus, the insurance and maintenance costs incurred will all be paid by the company.

Companies choose to go the hire purchase route when they need to purchase critical assets to the business but would rather spread out payments. In so doing, the cash flow doesn’t take too much of a hit from the purchase while there is still a guarantee of ownership after payment is completed.

Financial lease

This is also called a capital lease, and it is what you get after combining hire purchase and equipment leasing. It is similar to a hire purchase plan because the asset is capitalized on the balance sheet both as an asset and liability. At the same time, it is similar to an equipment lease because rent is listed on the P/L account.

The reason why it isn’t the same as hire purchase is that the rent paid overtime is the same as the asset’s value. Add to that, insurance and maintenance costs are catered for by the lessee. However, the asset is still technically the property of the lessor, and the lessee has to return it to the lessor after the period passes, and this makes it more of a lease.

A company may choose such an arrangement mainly for tax benefits because it is only capitalized on the balance sheet. That means paid rent can be offset against the profit gained to claim VAT thereby making it more tax efficient.

How does asset finance affect your business?

When a company decides to seek asset financing, it should expect to experience both positive and negative consequences. From the above types of asset finance, there are clearly a lot of options to consider, and these are the effects you can expect to have afterward:

Advantages

Many companies prefer asset finance because it is a faster way of raising cash flow compared to conventional financing methods. It takes time to get a bank’s approval for a business loan, much longer than customers, staff, and suppliers are willing to wait. For this reason, asset financing becomes a great alternative to keeping the business running smoothly.

Apart from the speed, asset finance is also issued at a lower interest rate because of the presence of collateral. Without collateral, the lender can only rely on the company’s credit score to set the terms of the loan. For a small or midsized company without an established credit record or one with a lower credit score, interest rates for a business loan could be brutal or just denied. Lower interest can save a company lots of money in the long term that could be used elsewhere.

Moreover, interest rates are fixed over the term of the loan compared to variable interest seen with typical bank loans. Inasmuch as variable interest can have some advantages, most companies would prefer predictability over potential and minimal cost savings. Under a fixed rate, the company knows exactly how much it will have to pay, and can, therefore, plan ahead.

Finally, there’s a comfort that comes to knowing what would happen in the worst-case scenario, and asset finance provides that. If your company is unable to keep up with the required payments, the lessor simply moves in and repossesses the asset in dispute. Although this isn’t a pleasant situation, at least nothing else in the company comes user question. But in the case of bank loans, for example, things can get very messy when both parties cannot agree on the way forward.

Disadvantages

Unfortunately, the same reason why asset finance is so popular is also the same reason why it might be deadly. Give thought to a company that, in order to raise cash flow, sought asset refinancing and put up some crucial assets as security. If they were to be unfortunate enough not to make it out of the cash crunch, those assets would be seized by the lessor. If these assets were crucial to the company’s operations, then it would mean the business would just halt. That is when the company would realize that it may have shot itself in the foot.

Worse still, companies don’t always get the best value for their assets. Lenders will often undervalue certain assets, and since this is what determines the loan amount, offer only a little amount of financing. It is not uncommon for this to happen, and companies in desperate situations more often than not take the bad deal. It really is akin to kicking a man when he’s down.

Is asset financing right for your business?

In the end, there is only one question left to answer, and that is whether or not to put up some of your company’s assets to receive funding from a lender. Knowing both the risks and advantages, you should be able to weigh between the two making the best decision about the way forward. But if you need a simple guideline to help you, remember to look at the future of your company.

All the benefits to be had from asset finance exist in the future from the cost savings to the company’s ability to keep moving in case of a seizure of assets. Meanwhile, the downsides are very real in the short term and could lead to the demise of your company. That means you need to consider if the funding will really help your business survive years down the road or not. If so, then this could be the way to go and if not, perhaps look for other funding methods.

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While small businesses are the lifeblood of the economy they also face some of the biggest challenges of any business – particularly when it comes to funding.

Managing cash flow, figuring out how to meet payroll, covering taxes, all while having money on hand to take advantage of opportunities as they become available are just some of the challenges that small businesses have to contend with on a daily basis.

Unfortunately for many small businesses, these challenges proved to be unsurmountable.

According to the United States Small Business Administration, 30% of ALL small businesses full up shop inside of three years because they run out of money. Traditional banks and lenders only approved 26.9 of all small business loans – and only 40% of all small businesses are actually profitable because of their cash flow concerns.

On the flip side of things, microloans offer unique opportunities for small businesses to gain access to the funding they need when they need it most. The US SBA also states that 70% of all small businesses could change their financial situation radically with microloans, and that the overwhelming majority of small businesses could be started with microloans of just $3000 or less.

Below we highlight this source of creative funding for entrepreneurs that are looking to take the plunge and turn their financial dreams into their financial future with a little bit more stability than they would have had before.

What Exactly Are Microloans?

Microloans, by definition, are simply loans that are much smaller than your traditional business loan package and usually have much lower interest rates and shorter terms attached.

The overwhelming majority of lending institutions that offer microloans make them available for between $500 and $50,000 or so, with the SBA reporting that the average microloans sits at just about $13,000.

The Microfinance Information Exchange as reported that 74 million borrowers worldwide have taken advantage of $38 million in microloans (as of their last report in 2009, a decade ago).

Who Can Leverage These Loans?

Aside from the fact that they put quick cash in the hands of entrepreneurs that need funding in a hurry the other big benefit of microloans is that the only real industrywide standard for leveraging these loans is that you are running a registered business in the first place.

While in each individual lending institution will have their own rules, regulations, and governing practices that dictate and determine who is qualified for these kinds of loans (something we will cover in just a moment), as a general rule if you have a business you have a chance to apply for these kinds of lending packages.

When you get right down to it, these loans are most commonly recommended to smaller startups, “bedroom businesses”, and new businesses that have very limited capital requirements and next to no real revenue history under their belt already.

Qualification Process for Microloans

As we highlighted above, the overall qualifications necessary to apply for these kinds of loans are pretty much nonexistent as long as you are running a legitimate business to begin with.

When you get down to the more granular level of applying for these loans, however, different qualifications are going to come into play – and before we highlight below are the most common you’re going to have to contend with.

For starters, you’ll need to have a business plan that has been finalized and ready to be presented to the lending institutions that you will be leveraging microloans from.

There isn’t a lender on the planet willing to provide any financing to an entrepreneur with pie-in-the-sky dreams or a rough sketch of the business they’d like to build. Lenders want to know what the future of your business is going to look like, what the real odds of success are, and whether or not you stand a solid chance of making a go of things and paying back these loans to begin with.

Secondly, you’ll need to do your level best to clean up your credit score as much as humanly possible. While a credit score is less important to microloan lenders than institutions handing out hundreds of thousands if not millions of dollars in financing packages this is still going to play a role in the financing you are able to secure moving forward.

The better your credit score, the better your odds of success getting the financing package you are after become – and the lower your already low interest rates with microloans will inevitably be. You’ll want to stay on top of regular payments, check your report frequently for errors and have them resolved, and maintain low credit rosacea rates as much as possible.

Third, it may be a good idea to put up collateral as a guarantee against the microloans you are leveraging. Thankfully, because these kinds of lending packages usually deal with lower dollar numbers securing this with collateral from your own personal assets (and especially with your business assets) is pretty much effortless.

If your credit score isn’t perfect the odds are pretty good you will be asked to secure your loan in some way, even if you aren’t looking to take out that much to begin with.

Finally, even just a little bit of your own cash and capital being put into your business will be looked on favorably by microloans lenders.

These lending institutions are going to see that you have a little bit of skin in the game yourself, that you are as invested as they are in your success, and that you are serious about making this business venture something that succeeds.

Highlighting Different Types of Microloans

Believe it or not, there are a whole host of different types of microloans that you could choose to take advantage of – and we highlight some of the most commonly leveraged options in this quick guide below.

SBA Microloans

While microloans have existed for as long as humans have been lending one another money and resources, this type of creative lending package wasn’t really “codified” until 1992 when the US Small Business Administration (SBA) made it a huge priority.

Looking to jumpstart the US economy, the SBA started to provide microloans financing packages to entrepreneurs all over the country but particularly in communities where financing was hard to come by.

The SBA Microloans Program was an almost overnight success, particularly when the SBA began to partner with intermediary nonprofit organizations to provide funding packages (with a $50,000 limit) that traditional lenders weren’t even interested in servicing themselves.

Before we move any further, it is important to highlight the fact that the SBA themselves aren’t actually servicing these loan. This governmental organization is not legally able to actually service loans or provide financing packages directly to US businesses or US citizens. That’s just not the way these kinds of loan packages operate.

Instead, the SBA distributes the microloans funding to actual community-based nonprofit organization directly in local areas. These community leaders are then able to disperse these lending packages to community members, businesses looking to establish themselves, and those that seek out this kind of financing themselves.

Operating as an intermediary between the SBA and the businesses looking to leverage this financing, it’s a little bit of a convoluted process but these organizations are the “boots on the ground” that make sure this money goes to the people that need it most.

This is why you have to be sure that when you look to take advantage of SBA microloans you are seeking out organizations in your local area that offer this kind of financing directly.

Of course, the SBA does provide a number of resources to not only help you locate these funding solutions but also to help you manage your loans, help you with technical assistance, and to help make sure that you are making the most of the cash and capital you leverage through these packages.

Intermediary Microloans

Finding a list of local intermediary lenders that you can connect with his simple and straightforward. All you have to do is visit the US SBA website yourself, search for your local community, and you’ll be provided with a whole host of organizations that you can then contact to see if they may be able to offer you the financing you are after.

Some areas will have more SBA lenders than others but it’s unlikely that you will have to travel very far to get a face-to-face meeting with these institutions that can help you with your funding.

You should know that the lending limits, credit requirements, and other qualifications for these types of lending packages will be established by these intermediary lenders. It’s not a bad idea to shop around a little bit to make sure that you are able to get the kinds of long packages your after without having to jump through all kinds of hoops at the exact same time.

Leveraging Microloans

Actually leveraging these kinds of financial packages is pretty simple and straightforward after you’ve located the intermediary lender and have met or exceeded the qualifications and criteria for these loans that have been put forward.

For starters, you’ll need to figure out exactly how much you’d like to take out with your new microloans.

We made mention earlier of the fact that the maximum amount you can take with a microloan that has been secured by the SBA is $50,000, but that may or may not be the amount of money that you should be taking out with this kind of lending package.

We also mentioned the fact that the average SBA microloan is for about $13,000 with a lot of entrepreneurs asking for as little as $500 just to hit the ground running.

You’ll want to figure out exactly how much money you need with this loan, something that will be dictated by how you plan on using the money, the interest rates and payments you’ll have to make, and other cash flow considerations.

The negotiation of this detail will have to be handled with the intermediary that you are working with.

Secondly, you’ll need to figure out the term length of the loan that you are hoping to secure as well.

As far as the Small Business Administration is concerned microloans are able to be offered for any term length of time as long as they do not exceed a term of six years. Once you go beyond that six-year block of time the microloans transitions into a traditional loan, and then there are a whole host of other factors, key criteria, and qualifications that need to be met before you’re able to move forward.

The overwhelming majority of these kinds of lending packages are for significantly shorter terms than six years. Most microloans have terms that only stretch out about a year or two, with a fair share of these loan being taken out for much shorter blocks of time than that – sometimes for as little as six months or so.

Again, these are factors entrepreneurs will have to negotiate with the intermediary lender.

Finally, they’ll have to make sure that you understand exactly what you are repaying as far as interest rates are concerned.

On average, SBA secured microloans are going to have interest rates that sit anywhere between 8% and 13%. It should come as no surprise to anyone, however, that intermediary lenders (influenced significantly by interest rates set through the US Treasury) are going to have the final say over the interest rates of your specific lending package.

Running Through the Microloans Process

Moving through the actual application process so that you can leverage these kinds of funding packages is simple and straightforward.

Right out of the gate, you’ll need to find an approved intermediary financing organization that you can take advantage of SBA backed microloans with.

The SBA has a list of these organizations on their website but many of your local banks and other financial servicing organizations will prominently advertise the fact that they are SBA lenders. It’s not a bad idea to shop around just to get a feel for the lay of the land, the different qualifications you may have to meet, and to work with an organization that you feel comfortable with.

After picking your lender that you want to work with you’ll have to reach out to them directly to figure out the qualifications they have in place, the lending criteria you’ll have to meet, and whether or not there are any specific business development requirements that you have to accomplish before you get approved.

The overwhelming majority of these business development requirements are going to revolve around business and financial management, helping to improve your odds of success as a business owner and entrepreneur.

We’ve talked about this at length throughout this quick guide but the lenders that provide you with this financing want you to succeed and are going to do everything they can to make sure that you make the most of these financial packages.

The fact that the micro lending approvals process can be so subjective (and that qualifications vary so much from one lender to another) really highlights the fact that participation in these kinds of programs can skyrocket your odds of obtaining the funding you are after.

The last step in the process is to actually submit the application that you have worked on to get the funding you hope to take advantage of.

This process is pretty simple, pretty straightforward, and pretty streamlined – especially if you’ve already gone through the steps that we highlighted just a moment ago. Individual application processes can be unique and distinct from one another depending on the lender you are working with, but as a general rule the process shouldn’t take all that much time to get started and submitted.

After your application has been submitted, however, the wait can be a little bit longer than most entrepreneurs anticipate. Not only does your application have to be combed over by the intermediary lending organization and approved but it also has to be submitted to the SBA for their final approval and green light.

This can be fast tracked in rare circumstances, but most people should anticipate an overall wait time of around four weeks before they get final approval for the financing packages they are hoping for. Sometimes it can take even longer than that, which is why it’s always a good idea to talk to the intermediary lender you’re working with to get a feel for the actual timeline and their average turnaround schedule.

Alternative Options to Microloans

At the end of the day, while the US Small Business Administration operates as the primary source of micro lending opportunities they aren’t by any stretch of the imagination the only financers willing to provide these kinds of packages.

If you’d like to shop around a little more to see if you can get a better deal, more money, or faster access to the financing you are after it’s not a bad idea to look into organizations like…

• Accion USA
• TrustLeaf
• PayPal Working Capital
• Kiva
• LiftFund and
• Grameen America

…to see if they can help you with all of your micro loan needs.

It might also be a good idea to look into business credit card lending opportunities and other short-term loan packages from traditional lenders (or nontraditional lenders), depending on the specifics of your cash flow situation, the opportunities you’re looking to leverage, the timeline you are looking for funding, and a whole host of other individual business factors.

The post The 6 Best Microloans: How and Where to Get Them appeared first on Lending Valley - Trusted Merchant Cash Advance Company.

Step 1: Visit your bank’s online banking platform

All banks nowadays have a website. The main part of their websites guides visitors to the bank’s services and perhaps even opening an account. In addition to this, banks provide an online banking platform where existing customers can access their bank accounts remotely. This section should be easily accessible through a quick search on Google that will direct you appropriately. Furthermore, this section can be reached either on desktop or mobile regardless of the device you’re on.

Some people may find the online banking section via web browser uninviting or complicated. Others may even be worried about their account security for fear of hackers. If you happen to feel this way, you may want to find out if your bank offers a mobile app for download depending on your operating system whether iOS or Android. Most banks provide accompanying mobile apps to allow for secure, remote access that is also easy to navigate. If not, you just have to use the web browser.

Step 2: Log in to your bank account online

If you already have online banking credentials, logging in is very straightforward. All that is needed is your username and password and you’re in. Even if you have forgotten the password, recovery is easy simply by requesting a new one to be sent to your email and resetting it.

However, if you don’t have these credentials then you have to create them. Since you’re looking to download bank statements, the assumption is you already have an account with the bank and are not after a new account. Using your account number and other identification documents such as social security number and/or credit card number should get you into your bank account. When you get into your account by this method, you will be asked to create a new password that will be used for subsequent log-ins.

The logging in process is similar through a mobile app from the bank, and may even be simpler because of the simple interface. Either way, you get to log into your bank account and are now ready to download the bank statement.

It is very important to check the website you’re logging into carefully to avoid being trapped by hackers. They sometimes create dummy accounts just to get your account details and steal your money. Therefore, make sure it is the actual bank’s online platform by going through a search engine and checking the SSL certificate.

Step 3: Locating the bank statement

In this step, the process will vary greatly from one bank to another because they all have a different interface. Despite their differences in web design, you are really only looking for the option labelled ‘Statements’ or ‘View statements’. First, though, you would have to select the account from which you need to download the bank statement. This is especially important if you hold both a personal and business account where you would select the former option for personal needs and the latter for business needs.

Most banks have made it easy to locate the bank statements because they know how regularly they are requested. Once you locate the ‘Statements’ tab, you can select the period over which you want to view and download. That done, just click on the ‘Print’ button or icon. Doing this will display a dialog box asking you to select the format of download, download location and the name of the file.

The most important factor is the format you choose because it will determine how you are going to use the downloaded statement. The most commonly downloaded file format is PDF because it can be viewed on any device and printed easily. Besides, many banks ask for bank statements in PDF because they are harder to manipulate compared to, say, CSV.

Downloading a bank statement can also be done through the mobile app. Although the process will be a bit different, the key steps involve locating the ‘Statements’ page and selecting ‘Print’ or ‘Download’. When bank statements are downloaded by mobile, they will always be in PDF format because it doesn’t require additional apps to view on mobile.

You should also remember that downloading bank statements has a cost – nothing’s free after all. The cost of downloading the bank statement will vary from one bank to another and also by the number of transactions recorded in the PDF. In general, the charges will range between $1 and $10, which will be deducted from your bank account.

Step 4: Printing your bank statement

Once you have downloaded your bank statement on mobile or desktop, you can choose to print it and own a physical copy. The decision will depend on what you intend to use it for. For example, applying for a bank loan will necessitate a physical document, but some lenders may accept the PDF version as it is.

Step 5: Logging out

Whether you are using a personal computer or a shared one, it is always advisable to sign out of your online banking page. Nothing could be more sensitive, and the bank might even sign you out automatically after a few minutes of inactivity. Finally, remember to take note of the web browser you are using and whether it may have recorded your login credentials. Some web browsers do this to make it easier to log in thereafter, but it can put your account at risk if these credentials are acquired by someone else.

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Why would a company need a DBA?

There are various reasons why companies and individuals may need a DBA. The first is for individuals who would like to start a company without having to use their own name. Many individuals who would like to have a startup may prefer not to use their own names for their business. For example, an individual, Tom, running a design studio may prefer to operate as Premier Designs rather than their own name. To be able to do so, Tom would have to acquire a DBA for himself. Besides, some companies, clients and suppliers insist on working with other companies and not individuals. Therefore, individuals are forced to acquire a DBA just to be able to get contracts and jobs.

For an individual running a startup, having a DBA also allows them to create a business bank account. Since the company operating as DBA is legally considered a company, it can acquire a business checking account. Such a bank account has various benefits, with the most important one having to do with taxes. A separate business bank account from a personal account helps to separate business transactions from the personal ones. Come time to file business taxes, finances are separate and easy to distinguish without causing any confusion. Furthermore, it is important for an entrepreneur to maintain their business records and it helps when those are in a separate account.

Apart from an individual’s needs, even an already registered company may still need a DBA. Such a company may wish to create additional companies without having to register each one separately as a legal entity. A business may want to have additional companies either to open new branches or to diversify into a different space. Regardless of the reason, creating a completely new company costs more than a DBA. Thus, the same result is achieved at a minimal cost.

What are the advantages and disadvantages of having a DBA?

The main advantage for companies to acquire a DBA is that it saves on the costs associated with starting a complete business. The US Small Business Administration estimates that a startup requires about $3,000 to launch. Some of the requirements for starting a business such as an LLC include articles of organization and registration fees with the Secretary of State. The former can cost even thousands of dollars while the latter between $40 to $500. However, getting a DBA costs less than $100, which is much cheaper. Considering that a company user DBA still has all the rights of a registered company, this is perhaps the most affordable way to create a company.

Other advantages have to do with compliance and getting a business bank account, which has already been discussed. But using a DBA is not without some drawbacks. Because a DBA is not actually a corporation or company, there are no tax benefits to be gained from it. An LLC owner, for example, does not file for corporate tax returns in addition to their own individual tax returns. All they have to do is report their share of profits and losses on the LLC. This avoids double taxation and saves money. On the other hand, an individual running a company as a DBA any money made by the business is passed on to the individual and taxed.

Any person or company interested in getting a DBA should be aware of these drawbacks in addition to the advantages before they decide to get one.

How does a company get a DBA?

The specific process to acquire a DBA will vary by the state you are living in. Nevertheless, there are some similarities in all cases. First is to determine if you can even use the DBA you have in mind. The authorities will perform a check to see if the name is already in use by another as this would infringe on trademark laws. This part of the process is usually done by the office of the Secretary of State, but sometimes it might either be handled by another state agency or even the county office.

There are also some requirements for the DBA title where some require the individual’s full name or a part of their name accompanied by a short description of their services. All this is done at a cost, of course, but this will often be $100 or less. Remember to be patient through this process as it might take a few weeks to get the approval.

Some states will also require that you advertise the approved DBA name in the local newspaper. Accordingly, it’s best to confirm with the local business regulatory authority for the specific process within your state.

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Therefore, it is even more important for small business owners to find a solution to this problem and bridge the gap between health insurance for small and large businesses. In this complete guide, you will find out why you may need a health insurance plan, the options that may be available to you and the costs involved.

Do you even need health insurance at all?

Before even getting into the various insurance plans available and what they cost, the first thing you have to answer is whether you even need insurance. Most small business owners wonder about this especially if they only have a few employees. The answer is a resounding yes. Despite seeming like an unnecessary cost, health insurance actually works in your favor in several ways.

1. The law requires it

According to the Affordable Care Act, any business with over 50 full-time equivalents (FTE) employees must provide health insurance. An employee is considered full-time equivalent if they work an average of 30 hours per week. Once a business has 50 or more FTE employees, it is considered an applicable large employer (ALE) and is required to provide health insurance to its employees. This affordable coverage costs up to 9.86% of the employee’s annual income in 2019, up from 9.56% in 2018. Not offering this insurance when you’re an ALE will attract a $2,320 fine for every FTE employee excluding the first 30 of them.

The Affordable Care Act was supposed to encourage businesses to offer health insurance, but it didn’t work as planned. In a survey of small businesses in 2015, many were found to be offering reimbursements to employees who purchased individual health insurance. Although this was in violation of the law, a small proportion was considering paying the fine and keep issuing reimbursements.

2. You’re eligible for group coverage

When running a small business, you are eligible to receive group coverage rather than letting individuals purchase individual insurance covers. There are many options for a group coverage plan, but the specifics will depend on the demographics information. The insurance broker or company will assess various factors such as age to present an appropriate group health plan.

Group coverage is first and foremost more affordable. An insurance company will offer better rates because your business includes many people. This is possible because the insurance company gets to collect premiums from everyone in the group yet not all of them will need will make use of the cover. This is a good risk for the company, and they can lower the premiums to remain competitive. To increase their odds, they analyse the demographics data provided and structure the insurance plan accordingly. Once you have purchased the group cover, you can then decide whether to share the premium with your employees or cover all of it.

3. You might receive tax credits and benefits

To promote the Affordable Care Act and motivate employees to provide health insurance to their employees, it was made possible for those that complied to receive tax credits. However, to be considered for these tax credits, you must purchase the plan though the Small Business Health Options Program (SHOP) Exchange. Apart from that, you must also fulfil some requirements such as:

• having less than 25 FTE employees
• offer health insurance to all FTE employees
• pay them a salary under $50,000 a year
•       cover at least 50% of the premium for the health insurance

These factors will be considered when deciding on the tax credits to be received, but it can be as high as 50% off your contributions to the employee health premiums.

Besides receiving tax credits, there are other tax benefits to be realized. The health insurance premiums you pay would be written off as tax deductions and you can also have your employees pay their premiums with pre-tax earnings. This saves the company money as well as the employees. For the company, there will be less expenses because insurance premiums are the most common tax deduction for small businesses. And if you can make it so that employees pay premiums before tax, they can earn more.

4. Having happier more productive employees

Nowadays, job-seekers could choose a company that offers health insurance over one that doesn’t. That was illustrated in a Harris poll that revealed 86% of workers would opt for the former. This makes you competitive in the market by attracting the best workers in the market, while keeping them loyal to your company. Furthermore, health insurance ensures that employees get annual checkups that keep them from getting ill and taking more time off. It’s a win-win situation.

What are the costs incurred in a small business health plan?

It’s obvious there will be some costs incurred in purchasing the health plan from the insurance company. But did you know that you would have to factor in the cost of time spent researching on the best plans and educating your employees about it all? Time s money, and it is worth knowing just how much you’re spending.

1. Monetary costs

The cost of the health insurance plan will depend on the scope of benefits you’re asking and the number of people covered plus their dependents (if applicable). These are the factors an insurance company considers before coming up with a tailored plan for your business. Then you have to ask yourself what percentage of the cover plan you will swallow as the employer. The industry average for small businesses in 2017 was 80% of the premium while employees contributed for the remaining 20%. This was the equivalent of $6,486 per employee per. There may also be some additional costs if you used a third-party service to identify a plan for you.

2. Time costs

Most employees forget to factor in the time it takes to research various insurance providers online, asking their employees what they need and then consulting with other entrepreneurs and insurance experts. But once you factor these in, you start to look at the whole process as an actual cost to the business.

How to compare between health plans

When it comes time to choose between the various plans available, there are certain factors you have to consider.

1. Find out what the health plan would cover

The right coverage comes down to how much you are willing to spend. Ask your employees what they need in a health cover while considering your budget. For example, if your employees need regular doctor visits with specialists, then you may have to pay for better coverage. Otherwise, chose the most basic coverage if your employees don’t mind paying for their health costs individually.

2. What kind of plan is it?

Different plans have different structures, and the main four to consider are:

• HMO plans – best for tight budgets and cutting costs by going to doctors on the prescribed network of health care providers
• PPO plans – choose this if you’re willing to spend more to visit with specialist doctors for specific conditions
• POS plans – a balance between HMP and PPO plans, POS allows you to stick with your preferred doctor while still being able to get a referral to a specialist without paying too much out of pocket
• EPO plans – this allows you to stay with your preferred doctor with the option of finding a specialist even without a referral

3. What network is the health care provider under?

Consider which hospitals and doctors have been contracted by your insurance provider. The insurer will find the cheapest options, hence you and your employees pay less for staying within the network. If you have employees already accustomed to particular doctors, it may be worth selecting a provider within that network.

4. What are the costs

Insurance payments are either in monthly premiums, deductibles, copays and coinsurance. Deductibles are paid once, premiums paid monthly while the rest are paid per visit. Therefore, if you and your employees need frequent doctor visits, opt for higher premiums and lower copays and coinsurance and vice versa.

5. How much of the health care cost is paid by the business?

The decision will come down to the budget for healthcare and the savings from tax deductibles. Generally, though, a business pays at least 50% of their employees’ monthly premiums.

6. What are the needs of your employees?

Ultimately, you get to decide what plan to pick based on what you think the employees absolutely need. For example, a startup with generally healthy employees should go for lower premiums to save the company money because the employees don’t make regular doctor visits.

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