Tips on The Lending Process for Female-Owned Businesses

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If you’re a woman in the process of starting a new business, you’re in good company. The number of businesses owned by women in the U.S. is growing. In 2014, there were over nine million women-owned businesses, employing over seven million people and generating over 1.4 trillion dollars. For inspiration, check out this list of top women entrepreneurs.

This is great news, because it means women have the opportunity to pursue their dreams, support their families, and contribute to the positive growth of our economy – all on their own terms. If you’re in the process of getting started with a business of your own – whether you’re just bouncing ideas around or you have a firm business plan drafted – here are some quick tips on how to finance your new business.

Financing options and lending partners

It’s important to think through what kind of financing you’re going to need, both now and in the future as your business grows. Sometimes starting a business doesn’t require much money, and people can afford to finance it themselves.

But often, more money is needed to get off the ground and running. If you’ve thought it through and know you’re going to need a loan, consider what types of financing exist. A few examples include:

• Asset-based lending
• Account receivable lending
• Business Line of Credit
• Term Loans
• Factoring
• Traditional bank financing

The Small Business Administration (SBA) also provides some excellent resources to help women launch businesses, grow their existing business, and compete in the global marketplace.

Before meeting with potential lenders, have the following prepared:

– Business Plan: Having a firm grasp on what your company goals are, and precisely how you’ll reach them is critically important. Your business plan should outline these details, and will provide potential lenders with a thorough understanding of how you intend to run your business. Most importantly, preparing a good business plan provides you with an opportunity to demonstrate your professionalism, attention to detail, and ability to plan – all of which are important to potential lenders.

– Financial Documents: Once you’re moving forward and meeting with a potential lender for a loan, start prepping. Make sure all of your financial information is organized correctly and efficiently. Having the proper reports will help your lender understand your plans for the funding, how you plan to grow, and how you will eventually pay the loan back.
For more on what documents you will need and questions you might be asked, check out this previous post on our blog.

– Answers to FAQ’s: Be ready for questions the lender might ask you. From “Does the business control its inventory?” to “What is the future of the industry,” – have the answers ready. In order to prepare for this, share your business plan with a few colleagues and find out what questions they have. Chances are, they will be some of the same questions that a lender will be curious about as well.

We work with women to fund small-to-medium sized businesses and are experts in this area. If you have questions, or would like more personal advice on how to finance your business, give us a call today!

Small Business Lending Questions and Answers

Business-Questions-Answers

Here are some common questions that small business owners ask when preparing to find financing for their company:

Q: What documents will I need when applying for the loan?

A: Different lenders and types of financing may require slightly different documentation, but you’ll find the list is largely the same. According to the U.S. Small Business Administration, here’s a rundown of what you’ll need to have available when you apply for the loan..

– Personal background information, including previous addresses, former names, any criminal record, and educational background.

– Resumes, particularly if the loan is to help start a new business.

– Business plan, which all loan programs require alongside the application. This should include projected financial statements.

– Personal credit report, which you should obtain from all three major consumer credit rating agencies prior to submitting the application. Any inaccuracies or problems on your credit report will affect loan approval, so correct any inaccuracies before you apply.

– Income tax returns, as far back as three years.

– Financial statements, particularly for business owners with more than a 20% stake in the business.

– Bank statements, typically as far back as one year.

– Collateral, which varies greatly depending on the lender. Loans with greater risk factors may require significant collateral. Solid business plans and financial statements can show a business to be lower risk and can help alleviate the need for any collateral at all. Regardless, be prepared with documentation of collateral that you can offer.

– Legal documents, such as business licenses and registrations, rticles of incorporation, contract copies, franchise agreements, and commercial leases.

Q: What questions will a lender ask me?

A: Again, this varies depending on the lender, but, according to the SBA, the following are some standard questions for which you should be prepared,.

– Why are you applying for this loan?

– How will you use the loan proceeds?

– What assets do you need to purchase, and who are your suppliers?

– What business debt do you have, and who are your creditors?

– Who makes up your management team?

Q: What questions should I have for my potential lender?

A:

– What specific requirements does the bank have when applying for a loan, such as minimum credit score or cash flow?

– What are the rates and costs associated with this loan?

– Is the bank prepared to address my needs?

– What risks are there with regard to loan repayment? And how can these risks be managed?

– If I die, how will the loan be repaid? Will it affect my family?

– Does the loan have a prepayment penalty?

When you are looking for alternative financing for your business, and have questions, contact one of the Crestmark lending experts at 888-999-8050!

Class Is In Session – Employees to Benefit from Crestmark University

Crestmark launched an employee education initiative with a nationwide Pep Rally on January 7 that was kicked off by Crestmark Chairman/CEO Dave Tull. All Crestmark employees (including TIP Capital) were enrolled into Crestmark University, an online dynamic learning portal.

Crestmark University

Through this training platform, all Crestmark employees will have access to a library of more than 10,000 professional training videos and courses, including 300+ targeted videos on Crestmark’s policies and procedures. Courses are assigned throughout the year to employees and managers based on their roles and responsibilities within the company.

Some Crestmark University course examples include: Microsoft Office training in Word, Excel, and PowerPoint; compliance; business etiquette; supervision; teamwork; project and time management; and a full assortment of educational videos geared toward maintaining an effective and positive work environment.

“Crestmark University gives our employees the opportunity to learn more about their jobs as well as the jobs of others, and will lead to a broader understanding of how things work,” said Scot Lund, First Vice President, Director of Program Management, who leads the Crestmark University platform. “Over the next several years, we will be creating and adding to our internally prepared educational material. In addition to helping with training, recruiting, and retaining employees; this will set us apart from other lenders in our market, and we feel a more educated staff will further benefit our clients.”

The Benefits and Challenges of International Expansion

Many successful businesses in the U.S. turn their eyes overseas for new markets in which to grow their company, their client base and their finances. Some companies even take advantage of so-called “tax inversion” loopholes by merging with other companies and then moving their headquarters outside the U.S. in order to reduce their taxes.

Regardless of the method taken, businesses that traditionally deal solely in the U.S. can often faces challenges and hurdles when trying to expand abroad. The cultural differences alone can cause problems for some companies. But if you’re thinking of growing your business and expanding into different countries, be on the lookout for the following potential pitfalls and follow these tips to avoid them.

OverviewNight time

1) Know your audience.

You could make a presentation to a client in the U.S., and that client could love what you’ve done and consider it a rousing success. But when you make that same presentation to an international client, it falls flat.

In this case, the problem is likely not with the presentation itself, but with the delivery. Be sure to edit your presentations and pitches to fit the local market to which you are presenting (Japan, China, Germany, etc.). You may need to adjust the content or format or even revamp the entire pitch if it does not fit the target audience.

Be sure to maximize your time, as well. American audiences typically prefer quicker pitches, while European clients likely want to absorb a presentation for longer than an hour.

Finally, one helpful tactic is to design a website for each market, rather than create a blanket international site for all overseas markets. This shows attention to detail to each market and would allow for easier communication to specific nations.

2) Emphasize your history.

You’re presenting your company and your product to a new market, but you aren’t completely starting from scratch. There are certainly financial, cultural and trend differences between the U.S. and international markets, but you should still be sure to emphasize the successes you have had domestically.

After all, you’ve reached the point of considering international expansion, so why hide from the success that brought you there in the first place? Just be sure to tailor your product or service to your new target audience.

3) Understand cultural differences in business relations.

Each market will have different cultural quirks that might go unnoticed but could hamper your efforts to expand abroad. For example, American businesses commonly give positive feedback on presentations, but that feedback might not amount to much in terms of making a deal. European clients, though, prefer to make presenters earn their praise, so take a statement of affirmation from a European businessman to heart.

4) Plan ahead.

International expansion can help grow your business, but it also requires funds to bring it to fruition. Legal fees, acquisition costs, marketing, advertising and new salaries are a few of the expenses necessary to spread your business abroad. Be sure to have enough money set aside to take care of these fees, and set limits for your business so that you have some left over to give yourself a head start once you debut internationally. This will allow you hit the ground running rather than having to work to regain the money you sank into the expansion.

International business expansion is a difficult process, but one that pays off if done properly. Be sure to prepare and execute properly in order to reap all the benefits possible.

How Much Is Enough to Borrow for Your Business?

When you’re struggling with meeting the financial demands of your business, you may need access to capital. Whether you’re a newer business or you’ve been established for quite some time, a shortage in cash flow can hinder your operations. It’s important to decide exactly how much you need to borrow when you’re worried about making payroll, securing supplies for an upcoming special project, or when you need to take care of unexpected equipment repairs. If you borrow too much, you’re spending more than you need to on interest and loan repayment and that’s money that you could be spending on other things. If you don’t borrow enough, you’ll be scrambling to cover your expenses.

Financial Planning and Review of Year End Reports

Here are some tips for narrowing down your budget to help you determine the amount of working capital you might need:

Forecasting Your Future

  • Use conservative estimates on leads, conversions, sales and profit margins.
  • Analyze previous monthly, quarterly and annual reports for a comparable estimate.
  • Learn your industry’s high and low seasons; not only when they happen, but why they happen.
  • Make projections for company growth, in both employee needs, equipment needs, and customer growth.
  • When you’re planning to borrow money for a new chapter in your company’s history, factor in the method, fees and interest associated with your financing.

New Businesses

If your business is young, it can be even more difficult to estimate how much you’ll need to handle growth. A common rule of thumb is to try to cover costs through the first six months of business, but it’s a good idea to build in a safety margin even above the 6-month mark.  Here are expense categories you should analyze:

  • Payroll – Add up the salaries and wages for yourself, your employees and anyone else doing work for your company. Include sales, human resources and seasonal help. Don’t forget the taxes and fees that must be paid to the government and to any associations.
  • Marketing and Collateral Expenses – Include the costs of signs and business cards, marketing materials, and product or service development.
  • Overhead – Estimate costs for your office and operations, including rent or mortgage, supplies, insurance plans and utilities, business licensure, vehicle registration and long-term equipment. Consider all of the necessities you’ll have to purchase, even furniture and computers.
  • Extra Expenses – Talk to someone experienced in your business or ask a mentor for advice. They would be a great resource for information about expenses, fees and pitfalls you may not have considered. Most business owners are willing to help with hints and experiences that will help other people avoid repeating their mistakes.

Established Businesses

If you’ve been in business for a while, you may be planning to expand your operations. If you want to get a loan or business line of credit, it’s important to organize your books and understand where all of your money is coming from and where it’s going. Ensure that you’ll have enough funding by making a list of your current and future expenses, as well as your sources of income.

  • Start with your routine expenses that are part of your monthly budget.
  • If you’re expanding, list any costs involved in additional personnel, equipment, office space and operating supplies.
  • For special projects, total the amount of capital needed to fund. Look at supplies, personnel, shipping and transportation.

Borrowing the right amount of money can help you grow your business without the aches and pain of overwhelming expenses. Once you’ve mapped out all of your costs and projected your income, you’ll have a better idea of how much you need to borrow. While there’s no exact science to estimating the right amount of financing, doing your homework will get you closer to a reasonable estimate.

Keep in mind that you don’t have to go through this process alone. The lending experts at Crestmark can work with you to determine the best solution. Give us a call today!

2014 IPO Update: A Look at the Debutantes

Believe it or not, 2014 is already more than half over. It started out with a bang when sixteen companies had their financial coming out parties in January, and it’s been a busy year ever since. There are 135 initial public offerings (IPOs) on the books so far for 2014. The step from being a privately held company to IPO has had a positive effect on some, but for others – not so much. Let’s take a look at five debutantes of 2014 to see how they’ve fared.

ipo-stockmarket

 

Parsley Energy

Parsley Energy, Inc. (NYSE:PE), based in Midland, Texas, went public on the NYSE on Friday, May 23, 2014. With operations in the Midland Basin, the independent oil and gas company has grown significantly from a two-person start-up in 2008 to a solid producer of 12,000 barrels of oil per day. Parsley’s initial offering of 50 million shares made their market entrance at $18.50. They closed last week at $23.73 with 117.81 million shares.

ServiceMaster

ServiceMaster Global Holdings, Inc. (NYSE:SERV) debuted with an opening share price of $17 on Wednesday, June 25. It closed at $17.95 on its first day. The commercial and residential maintenance and service provider started with an initial offering of 35.9 million shares. As of Monday, June 30, it was selling at $18.75 per share.

Eagle Pharmaceuticals

Not all IPOs have done as well as they’d hoped. Eagle Pharmaceuticals (NASDAQ:EGRX) went public on Wednesday, Feb. 12. It sold 3.4 million shares. The New Jersey-based company opened at $15, closing on its first day at just $12.83. It has rebounded a bit, bumping up to $13.57 as of Monday, June 30. Eagle Pharmaceuticals, founded in 2007, develops and commercializes injectable drugs for oncology and critical care medicine.

Malibu Boats

Based in Malibu, Tennessee, this sporting boats manufacturer has made modest gains as one of the early IPO debutantes of 2014. Malibu Boats (NASDAQ:MBUU) opened at $14 on its first day, Friday, Jan. 31, closing at $17.03. It sold 7.1 million shares. As of June 30, the recreational boating industry continues to embrace Malibu, as its stock price was holding at $20.03.

GoPro

One of the biggest splashes in IPOs for 2014 has been GoPro (NASDAQ:GPRO). The innovative highline sports camera maker has gained a lot of attention with its recent offering, opening at $24 on Thursday, June 26. With much excitement around its first day, it closed at $31.34. It sold 17.8 million shares. As of June 30, GoPro was selling at $35.76.

As IPOs continue to garner attention in 2014, with many companies planning to go public before 2015there’s hope for upcoming public offerings for the rest of the year. For companies that seek an increase in funding, the market has shown promise for some, but for others, it’s just been a struggle.Going public isn’t the only way to raise funding, however – if your business is in need of working capital, call us today to talk about options – we are happy to help!

The Shifting Role of E-Commerce in the U.S. Economy

The Internet’s impact on the U.S. economy is always growing. The share of online sales is slowly creeping up as the share of brick-and-mortar retailers continues to decline year over year.

E-tailers See Growth

A recent study by the Centre for Retail Research estimates that the online retail share of sales in the U.S. is expected to hit 11.6 percent this year. The figures for nine major countries, including G-8 nations France, Germany, Italy and the United Kingdom, were based on estimated online retail sales of goods. This is good news for U.S. e-tailers, who rely on 55 percent of the country’s population to shop online. Online sales that were ordered via mobile devices are estimated to be as much as 13.8 percent for 2013, and are expected to rise to 19.9 percent this year. These figures didn’t even include restaurant food, insurance, tickets, and gambling purchases.

crestmark-ecommerence

E-commerce Sales Are Up

The U.S. Census Bureau has also announced that for the first quarter of 2014, the total retail e-commerce sales are up 2.8 percent over the fourth quarter of 2013. That’s in increase of $71.2 billion. The estimate is adjusted for seasonal variation, not price changes. When compared to the first quarter of 2013, the increase is 15 percent. Unadjusted, the year-over-year comparison is an increase of 14.9 percent for e-tailers, and an increase of 2.2 percent for all retail sales.

Retail Storefronts Decline during E-commerce Rise

While e-commerce increases amid promising signs of an economic recovery in the U.S., more retailers are expected to close their brick-and-mortar storefronts. Staples, Inc. has announced that it plans to close 225 office supply stores by the end of next year. RadioShack, known for selling electronic gadgets and trending tech toys, announced in March that as many as 1,100 of its stores worldwide would close. In recent weeks, however, the company has decreased that number, citing disagreements with its lenders over the best way to manage its poor performance. According to reports by USA Today, RadioShack announced a loss of $191 million in the fourth quarter of 2013 over its 5,524 stores and dealer outlets. With 4,300 brick-and-mortar locations in the U.S., the company still plans to close a large number of stores, but no longer one-fifth of its locations.

The shift from retail storefronts to ecommerce business is hardly over, as there’s dust still left to settle in the broader shopping landscape. This transition is likely to bring more innovation to the marketplace, with brick and mortar stores finding new and creative ways to serve their customers, and internet based businesses working to take market share away from those same companies. This type of healthy competition is great for consumers though, and we look forward to seeing how things play out for the rest of 2014!

What Type of Lender is Right for My Business?

When business owners or executives first realize the need for working capital, it can be difficult to know where to start. People often ask, “Should I call my local bank? What about non-traditional lenders? What’s the difference between the two?” We hear this all the time, and wanted to provide a resource to help!

We recently released an Infographic titled “What Type of Lender is Right for My Business?” This provides a quick and easy reference piece for prospective borrowers to determine whether they’d be better suited pursuing a traditional bank line of credit, or to look into alternative financing. Each lending option has unique characteristics, and this infographic helps clarify how different business situations are best suited for certain lending options.

The infographic follows a flow-chart format, and leads users through a series of yes / no choices about their business. Key points that determine the right fit include:

– Does your business have three or more years of positive business history?

– Do you have limited or negative equity?

– Do you have limited or inconsistent profitability?

– Do your assets exceed your liabilities?

– Does your business have positive trends?

– Are there opportunities for growth?

By answering each of these questions, it’s easy to see whether your business may qualify for traditional or non-traditional lending. We are excited about this release, and hope that many businesses find this useful!

Crestmark Infographic Traditional vs Asset Based July 2014

Are you in the market for a business loan? If so, ask yourself the questions on this infographic and then give us a call to discuss! We’d love to help walk you through the process of figuring out what lending option would be best for you and your business.

Grad Students Take the Lion’s Share of Rising Student Loan Debt

Students getting college degrees are borrowing more money to complete their educations than they have in the past. Student loans have topped $1 trillion. A study recently released by the New America Foundation shows that student loan debt is outpacing all other types of loans except for residential mortgages. Students seeking advanced degrees comprise only 17 percent of student loan borrowers, but they’re getting the lion’s share of the money.

Crestmarks Graduates

The study revealed that grad students borrowed an average of $57,600 in 2012, as compared to just $40,209 in 2004. That’s an increase of 43 percent in just eight years. Students are hoping that advanced degrees will give them better employment opportunities in a struggling economy.

After completing an undergraduate program, many students are finding it difficult to land a job. The philosophy is that going back to school to get a higher degree will make them more competitive in the workforce. A bachelor’s degree is no longer enough for some careers. The New America Foundation research showed that some students with master’s degrees weren’t necessarily getting higher salaries, just hoping to get the edge over the competition. How much they borrowed was directly related to their field of interest.

For example, students borrowing money for Master of Arts degrees dropped $58,500 in 2012, for an average of $20,500 more per student. On the other hand, the average student financing a business administration master’s program in 2012 borrowed $42,000, only $600 more than their counterpart in 2004.

According to non-profit American Student Assistance, of the 20 million students attending college every year, about 12 million borrow money to help cover their expenses. The consumer Finance Protection Bureau reports that of the more than $1 trillion in student loans, $150 billion comes from private lenders, and the other $864 billion is connected to federal funding.

Understanding Your Business’ Buying Cycle and Making the Most of It

Making sales is part of running your day-to-day business – it’s what brings in revenue and keeps the business moving forward. We all hope that customers come to us ready to buy, but in reality, there’s a lot more to it than that.

Buying Cycle

The traditional buying cycle is broken down into three segments that your customers move through in the process of making a purchase. By understanding your business’ buying cycle, you can take the right steps and make the most of it.

Awareness

The first step in the buying cycle is when potential customers discover that they have a need for your product. They’re not ready to buy, but they are aware of their need and your potential to fill that need. You can find these potential customers through marketing efforts and by increasing awareness of your brand. Introduce yourself. Capture their attention without pushing for a sale. The use of email newsletters, blogs, and direct mail alerts about upcoming sales are examples of the soft, but necessary, approach during this fragile part of the buying cycle.

Consideration

During this second phase of the buying process, your potential customers are seeking information. They’re considering a purchase and want to be educated about your company and your products. The availability of information is critical in this stage. Prospects are likely to read customer reviews, visit your website for product descriptions and make comparisons of their options. Their sense of urgency has elevated beyond curiosity, and this stage is often triggered by an event that sparks an increased interest. For example, they may have run out of an item or have an upcoming project where use of your product could make or break their success.

Identify the various triggers that prompt people to buy your products and make it known that you can provide solutions to these problems. Build website and newsletter content around these issues. Make testimonials from previous customers available and accessible for those in the second step of the buying cycle. Quench their thirst for information, and continue to build their trust.

Making a Purchase

When someone is ready to buy, you need to be ready to sell. Customers want attention in this third and final phase. If they already have a contact for your company, it’s important that this person is available or that your customer can somehow initiate the sale right away. Providing around-the-clock automated ordering or live support is another option to help your customers make their purchases when they’re ready. Information about forms of payment and how to contact your company should be visible on all of your marketing materials and on your website to capture the lead and close the sale.

Identifying and understanding how your customers fit into the buying cycle can help your business gain qualified leads and increase your sales. So take a look at your business – what can you do to improve your customers experience in each of these stages? The proper planning and implementation here can be a huge step forward for any business.