Why Your Business Might Wow an Online Lender but not a Bank

Banks operate under a different set of specifications when it comes to business lending. They often offer many additional services, and as such, have traditionally taken a more conservative approach to selecting businesses to lend to. The most obvious characteristic that banks emphasize is credit score. Less than 800 (out of 850), and they’re usually not too impressed. Of course, with a credit score that high, it’s not hard to find organizations willing to lend you money.

Making It Real

Alas, most small-business owners can only dream of that kind of credit score. It’s no secret that when you’re running your own business, decisions have to be made that might negatively affect your credit score, even if you’re running a very successful enterprise. That’s why it’s a shame when we speak with an owner that thought the only place to secure a business loan was from a bank, and had been repeatedly turned down. Our mission is to reach business owners that know that there is more to a successful business than a credit score.

What’s the difference between how an online lender and a bank might view your business? Two words: cash flow. You see, online vendors value your cash flow as much as your credit score. If you have a business that generates day-to-day cash flow, we know that’s impressive, even if your credit score is sub-par. That’s just one of the reasons online lenders have a much higher loan-approval rate than banks. Here at IOU Financial, we pre-approve 85 percent of the business loan applications we receive.

Keep in mind that no loan officer at a bank was ever fired for saying no to a loan application from a business with a lower credit score. Unfortunately, their current lending procedures don’t take into consideration lots of other factors that can be used to measure a business’ health, growth, or ability to pay back a loan. Providing additional information that a bank hasn’t asked for can create confusion and almost never has a positive impact on gaining approval.

WOW Factors

Online lender on the other hand, look at a variety of other factors.  Wondering which ones really impresses us?  Here are 5 more factors that that you can use to wow an online lender:

  • You own at least 80 percent of the business you operate, or 50 percent if you partner with your spouse
  • You’ve owned or purchased a business that’s been operating for at least one year
  • Your business generates at least 10 bank account deposits per month (we’re talking about retail and e-commerce businesses)
  • You have at least $100,000 in annual revenue
  • Your business bank account has an average daily ending balance of at least $3,000.

Meet these criteria, and we’ll say. “Wow.” Unlike a bank, online lenders can typically provide you with an answer the same day or even immediately. Our advanced software quickly evaluates dozens of data points like the ones listed above to provide you with an immediate loan decision.

As an online lender we also appreciate the fact that your reasons for borrowing vary from one business to the next. True, almost half of our customers use our loans to purchase equipment, but a sizable number put the money to work expanding their business, plugging a temporary gap in cash flow, purchasing/building inventory, or pursuing some other goal.

Turn the Tables and Let an Online Lender Impress You

OK, we’ve made it clear how you can impress us. But we also want to wow you too. One way we do this is by taking the red tape out of our 3-minute business loan application process. Not only is it quick to apply, when approved, your money will be available within a day or two, and deposited directly into your business bank account.

Worried about the interest rate?  Believe it or not, online lenders; rates can be very affordable, and often much less than the cost of merchant cash advances. Your loan is repaid with fixed automated daily payments made directly from your bank account, helping you avoid big monthly payments that are due all at once. What’s more, at IOU, we never charge you upfront costs to apply or qualify for your loan, we are happy to renew loans once you’ve repaid 40 percent of the principle, we don’t charge pre-payment penalties, and we charge simple (not compound) interest on your unpaid principle.

So what are you waiting for? Does your business have some of the wow factors we mentioned? There’s no reason to wait. Find out for yourself how easy it is to apply for a loan today.

5 Costly Mistakes Every Business Owner Can Make

When you run your own business you are working day and night to ensure it continues to grow, but you could be throwing money away without knowing it!
Here are the top five mistakes a small business owner will make that cost them BIG:

  1. Picking the Wrong Partner: The right partner is one who can complement your areas of expertise in order to form a well-rounded management team. Often, entrepreneurs reach out to spouses or other family members to serve as partners, an idea that can be deadly if bickering results. In 2003, U-Haul went bankrupt for just this reason. To play it safe, don’t blur the line between your business and personal relationships.
  2. Becoming Distracted: If you are spread too thin, you might have trouble maintaining a high level of attention to any one area of your small business. With too much attention to operations, your sales will suffer. Too much attention to sales, and your operations becomes inefficient and riddled with mistakes! A solution may be to delegate some control to trusted partners or associates. Have a team you can trust to report back to you on important updates and issues, so you can still handle them personally, while running the other areas of your business.
  3. Mismanagement of Inventory: At first glance, when you are running low on inventory, you may think it is great and that products are so good that they are bought right away! WRONG. When you are low or out of inventory your small business is losing money from the potential sales. However, on the flip side, too much inventory can mean you are giving it away when you are trying to clear shelves. Inventory management can make or break your business, so it is important to start collecting data and put the time into understanding this area of your business. Keep track of sales so you can analyze your data from year to year and understand trends.
  4. Not Trusting your Team: You have some secrets you’d rather not share with your partners, associates or consultants? Not the best idea. When you hold your cards too tightly, you fail to get important advice that can help you succeed. Instead, use non-disclosure agreements so you can talk freely with those you’ve trusted to help grow your small business. When you are able to discuss the obstacles you are facing, you never know what partner or consultant may be able to offer the advice that saves you hundreds or thousands!
  5. Running Short on Working Capital: It’s like running out of oxygen – terrifying and deadly. Without sufficient working capital, you can’t pay your vendors, buy inventory or pay yourself a living wage. If you don’t have sufficient funds to buy inventory, update equipment, or continue marketing campaigns, these are all going to have big effects on your revenue. Consider a small business loan from an alternative lender to ease any variance in cash flow. This ensures you have the funds to continue running your business smoothly.

When it comes to any mistake a small business owner can make, the common denominator is always money. Today, money should never be an excuse for a dip in sales. You can have up to $150,000 in your bank account in as little as 24 hours from IOU Financial.

IOU Financial is the modern way to secure business loans quickly and inexpensively. Let us help you ensure the success of your business through affordable working capital.

Customer Success Story: Taking on New Projects

Apple Grove Renovations was founded in the summer of 2010 by owner, Marcus Gregory. Marcus brought a broad construction background spanning over twenty years in the residential, commercial, and industrial fields and quickly forged a team of skilled employees and professional subcontractors.  In the spring of 2014, AGR relocated its offices from Louisa to Richmond to better serve its client base. In the years since AGR’s inception, the in-house staff of craftsmen and top-notch subcontractors have enabled AGR to grow rapidly and tackle ever larger projects.IOU Financial Testimonial

To ensure even cash flow while taking on projects, AGR sought out additional working capital from IOU Financial. “Many of our jobs require quite of bit of upfront costs, but we don’t receive payment until the work is complete,” explained Marcus “The funds have allowed us to purchase materials for new projects and keep the business rolling.”

“[IOU’s] strengths are its customer service and its speed throughout the entire process,” said Marcus. “It’s a quick and easy way to get capital to keep your business moving and growing.”


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5 Things You Should Have Done by Your 2nd Year in Business

Congratulations. You’ve made it past the first year in business. That’s no small feat, as the Small Business Administration points out that 20 percent of small businesses fail in their first year. Sure, there are no guarantees when you open a business, and things can always change, often due to forces beyond your control. Nonetheless, you’re on your way. If you haven’t done the following 5 things by now, get moving!

  1. Stabilized Your Cash Flow: By now you’ve learned how much money you need to have come in every week to make sure you can pay your bills, buy your inventory, earn some money to live on, and so forth. If your cash flow seems wildly unpredictable, workout a revised sales and marketing plan so that you have decent estimates of your revenues if you haven’t already. You should also have a fair idea from your books and records of how much you have to spend each week, how much money you can keep in the bank, and what kind of profit margins you should expect. You need to tweak your strategy, tactics and/or operations to get your margins to where they can sustain themselves. Remember, without sufficient cash, your small business is fried.
  2. Made Plans to Expand/Optimize Your Business: You have probably learned quite a few lessons about your small business during the first year. For example, you may have realized that your original plans were overambitious or too timid relative to the market conditions and to the availability of capital. You might have uncovered underserved elements in your market that you can capture by expanding your product /service line, your geographic locations, and/or your operating hours.
  3. Secured Adequate Working Capital: Based on your performance so far and your plans for change, you need to establish an adequate amount of working capital to fund your operations, including inventory purchase. Your best bet after one year in business is to contact IOU Financial to borrow up to $150K effortlessly and at an affordable APR. If you own at least 80 percent of your business, have an average credit score, have a positive daily cash flow that lets you keep on average at least $3,000 in your business account, and you clear $100,000 a year in revenue, you have an 85 percent chance of getting the loan you want from IOU Financial. Forget about bank loans, they are really hard to get.
  4. Hired the Proper Staff: You might have started off as a one-person operation, or maybe you began with a small staff. After a year, you have a better idea of how many and what kind of people you need. If you haven’t done so already, dismiss any unproductive staff  and find the best people you can afford.
  5. Developed Your Social Media Strategy: Your website should be search-engine optimized, bug free, contain perfect content (if not, hire a good freelance writer), and include, if appropriate, a bullet-proof online checkout facility. You should have set up your accounts on Facebook, Twitter, LinkedIn and so forth, and made sure you continually add new material onto your social media sites.

Enjoy your second year – with sufficient know-how and capital, you’ve got a good shot at long-term success.

Get more important tips from IOU Financial as you grow your small business by subscribing to our blog.



Get Your Spring Cleaning Done for Your Business

Your small business, and more importantly your employees, have survived yet another long and dreary winter.  It’s time to capitalize on these extra hours of daylight, and get some much needed spring cleaning done for your business.

Sure, you need to organize files, disposing of unneeded paperwork, and straightening your desk, but spring cleaning can mean so much more.

The birds are singing; we have more daylight. There’s just something about the spring that gives us a more positive feeling. Take this energy boost to take a fresh look at your inventory, equipment and staff before the Summer hits!


Whether you are about to head into your busy season, or your slow season, now is a great time to evaluate what you have in stock.  Do you need to run a clearance to start making way for more summer items? Maybe you need to stock up on more inventory to meet demand? Now is a great time to evaluate where you were a year ago and make decisions based on your sales data from previous seasons. Inventory can make or break your small business, and past seasons can help tell you what products you will need more of on hand.


Your equipment may have been over or under used in the past couple of months, so take the time to ensure everything is working properly.  This is a great time to get any repairs done, or purchase new.  Yes, I am talking to you too web based businesses! Your website is your most important piece of equipment you have, so be sure to update your content and design.  Take the time to sit down with someone who is using your website for the first time and watch them use your site.  This will give you great insight into improvements you can make to increase conversions through easier usability!


Spring can be a great time for boosting morale around the office.  Set up a happy hour after work, sign up for a softball league, or even just have a meeting outside!  The little things to ensure your staff enjoys working together (along with the added Vitamin D) can really increase productivity around the office.

Take time to look at what you are doing to grow your business. Do you have new ideas you’ve been wanting to implement, but the winter put you in a stagnant mood? Now is the time to go for it!  It’s about moving your business forward in the direction you want it to go, and if money is the only thing holding you back, see what a small business loan from IOU Financial could do for you!

5 Things Your Bank Won’t Say About Small Business Lending

We are not out to discredit banks or bankers, but we do believe that many potential borrowers make unwarranted assumptions about banks that we’d like to clear up. The bottom line is that sometimes a bank is a good place to get a small business loan, and other times it’s not.

  1. Banks Are Not Impartial

The small business loans you will be offered by your bank will be “products” that have been prepackaged for the “average” consumer. Certain products are favored and the bank pushes these, often offering incentives to loan officers who sell these products. This is not to say the products aren’t good, they just may not be good for you. Don’t expect you banker to tell you that, however.

  1. Most Bankers Are Not Credit Advisers

Even though bank officers may have fancy wood-paneled offices and wear expensive clothing doesn’t mean they have any certifications as credit advisors. For example, the average banker doesn’t have FICO Pro Certification, a basic credential that attests to knowledge of how credit scores work. Don’t expect this kind of expertise from the average banker, and if you need help with your credit history or score, be sure to speak to a qualified expert.

  1. Bank Loan Officers Are Not Human

Well, that’s a little extreme. What we really mean is that most banks use computer algorithms to determine whether you qualify for a loan and how much interest to charge you. Typically, the loan officer you visit takes down information and forwards it to the loan underwriters at the bank’s headquarters, who will not know or care one bit about any special circumstances attached to your small business loan request. For example, if you want to open a boutique in an up and coming area of town, some far-away analyst will look up the address, see that it’s listed as depressed and likely count that against you. In reality, the area may be on the rebound and your business plans may make a lot of sense.

  1. Banks Are Not the Only Alternative

Often, when entrepreneurs are turned down for bank loans, they feel that the door to credit has been shut on them. IOU Financial has made small business loans to thousands of such individuals, because they take the time to understand the full picture. Non-bank commercial lenders are looking for ways to say yes to your loan application. They have the flexibility to take into account a broad range of information beyond your credit score. Furthermore, non-bank lenders may be able to work out payment terms that banks do not offer. Banks can be a great resource, but remember that they are just one kind of resource – when it comes to small business loans, you have other options.

  1. Where Did My Loan Officer Go?

One dirty little secret among bank employees is that the good ones don’t remain at one place for very long. If your banker can draw a bigger salary from a competitor, chances are you’ll be assigned a stranger the next time you visit. Small business lending companies are run by entrepreneurs who are in it for the long run. If continuity of service and a personal relationship are important to you, think outside the box, er…bank, to include lenders where the owner is on premises and eager to meet with you.

For more small business lending advice be sure to subscribe to the IOU Financial blog.

The 3 Key Factors That Determine Your Rate for a Business Loan

There is nothing unusual about a small business seeking to borrow money. The two biggest questions the owner must face are:

  • How much will I be able to borrow?
  • How much interest will I pay?

The two questions are interrelated, because they are tied to how a lender evaluates your loan application. Whereas banks look almost exclusively at credit score, a good online lender such as IOU Financial takes a more holistic approach to your business and determines your small business loan rate accordingly.

The Holistic Approach

The three key factors we use to determine interest rates are:

  1. Credit Rating: Unlike a bank, we use credit ratings as just one component when underwriting a small business loan. The credit rating is a mix of your FICO score and your credit history. Because we look to other factors as well, a low credit rating doesn’t disqualify you from getting a loan at IOU Financial or force you to accept an astronomical interest rate. In fact, our rates are quite affordable and about half of what you’d pay for merchant cash advances. Folks can boost their credit ratings by handling credit responsibly, pay back loans on time, and keep your company’s debt-to-equity ratio reasonable.
  2. Cash Flow: Lenders set interest rates based on prevailing economic conditions and the risk that the borrower will default on the loan. One way to reduce that risk is to have a positive daily cash flow – that is, you collect more money than you spend on a day-to-day basis. IOU Financial considers this to be as important as credit score. You see, we don’t bill monthly the way banks do. Instead, you repay us daily in fixed, manageable amounts. If you show that you are consistently generating daily positive cash flow, we know that you will be a less risky borrower and can offer you more attractive rates.
  3. Financial Condition: Finally, we take a look at several indicators of your business’ risk. We want you to own the bulk of the company yourself, or share ownership with your spouse. Long-lived companies are less risky, so we want to see borrowers with businesses that are at least one year old. If you run a retail business (online and/or bricks and mortar), we want to see you generate monthly at least 10 bank deposits. Higher volumes can help with loan access and interest rates. It’s also helpful if you earn an annual revenue of at least $100,000, and that you average at least a $3,000 end-of-day balance in your bank account.

Affordable APRs

We use advanced computer algorithms to assess all three key factors when determining your loan APR. These quickly tell us whether you qualify for a business loan (85 percent of our applicants do) and how much interest you’ll pay. The nice thing is that we don’t charge fees for applications, processing or early repayments. You are charged simple interest on the amount you still owe, and no more.

We invite you to apply for a loan of up to $150,000 from IOU Financial. You’ll find our service is superfast and you’ll appreciate the low APRs available. Contact us today at (844) 750-8468!

For more lending advice be sure to subscribe to the IOU Financial blog.

3 Ways to Survive An Unexpected Economic Downturn

Running a small business can be quite rewarding, but it’s also risky. When the economy is brisk, a good business should do well. But economies can suddenly turn down. Furthermore, even if other industries are doing well, you may run into problems confined to your sector or even to your individual business. Whether the issues are national or local, it makes sense to take precautions when times are good so that you can survive the bad times. Here are 3 ways to help ensure your survival during an economic downturn:

  1. Maintain Your Liquidity: All businesses need cash. Small businesses have few sources of funding, so ensuring liquidity can make the difference between survival and bankruptcy. This means you must be able to access additional cash when necessary. As a leading supplier of loans to small businesses, IOU Financial understands that good businesses sometimes have unanticipated challenges and need money quickly. That’s why we have streamlined the application process, provide instantaneous loan approval, and get you your money in 1 or 2 days. Most banks don’t move very quickly and are much more concerned with your credit rating. We on the other hand approve 85%of applications, and we look well beyond credit scores to assess your cash flows and assets.
  2. Conserve Your Cash: Your working capital must pay for your immediate needs. You can conserve your working capital by accelerating collections and postponing expenditures. To speed up collections, you can offer larger discounts for credit buyers who pay quickly. You can also factor your A/R invoices and auction your inventory. If you run a retail store (brick–and-mortar or virtual), extra marketing and markdowns can accelerate sales. At the same time, contact your vendors and ask for more time to pay – many vendors will understand your need to conserve cash and be willing to negotiate relaxed payment terms. Postpone purchases such as inventory and equipment. Also, defer soft costs like travel, education, bonuses, retirement plan contributions and so forth. Your goal is make your operations leaner and more cost-effective, so that you are in a good position once the market improves.
  3. Stick It to Your Competitors: If your sector is undergoing a downturn, turn it to your advantage by making your competitors feel the pain more than you do. This means you need to be imaginative and aggressive, doing things a little differently from your old ways. You can do this in a number of ways:
    1. Actively seek out new business and customers. You can buy customer lists, run email campaigns, increase advertising, offer loyalty rewards, slash prices, extend your hours of operation, and if possible, hire away top talent from your competitors.
    2. Add on one or more salespeople, if appropriate. Find new ways to motivate your sales staff, perhaps with bigger bonuses and other perks. It’s also a good time to reconsider underperforming staff – you may need to consider discipline or separation.
    3. Try to increase the quality of your customer service. When your competitors are falling apart, distinguish yourself by treating the customers better than anyone else does. Don’t ever let your customers see you sweat!

Face the economic downturns with courage and resolve – with IOU Financial at your side, the chances are good that you’ll make it through.  Be sure to check out our blog for more tips for small business owners.



5 Things to Consider Before Expanding Through an Acquisition

You can boost your company’s size, and hopefully its profits, by making a smart acquisition. Not all acquisitions make sense, and an ill-conceived one can send your small business down in flames. So it’s important to size up a target company along several dimensions before making an offer.

  1. Financial: The two financial questions you have to ask are whether the numbers make sense and can I afford the purchase.
    1. Due Diligence: Just because your business is small doesn’t excuse you from doing due diligence on a target company. This means using certified auditors to comb through the target’s books, and having lawyers examine all contracts, agreements, pending lawsuits and any other legal baggage. You need to know that the numbers add up, that the owners aren’t hiding something that could come back to haunt you, and that everything is on the up and up.
    2. Capital Structure: Can you afford the takeover, and will you have to sell off parts of the combined company in order to cut expenses or pay for the acquisition? Are the target’s assets and liabilities congruent with yours? One suggestion is to make sure you not only have the cash available to pay for the acquisition, but also to cover the costs involved with vetting the purchase, and enough to cover additional expenses associated with operating the new venture. IOU Financial offers business loans of up to $150,000 to finance the growth of small companies, and can help you secure funding quickly and without red tape.
  2. Defining Your Market: What effect will the acquisition have on your market(s)? Will you be expanding your products/services, and if so, is there sufficient demand given whatever constraints you have, such as location and demographics. You’ll need to perform a market analysis, which requires considerable research, such as forecasted demand, market growth rates, the competitive landscape and the barriers to entry. This is all the more important if you are entering a new or undefined market.
  3. Effect on Your Brand Image: Does the acquisition make sense from the customer point of view. If you’ve developed some brand recognition, you’ve cultivated a customer base with certain expectations about the types and quality of your offerings. It might be confusing if the target isn’t a good fit for your brand image, even if the acquisition is financially sound. For example, if you run a plumbing supply company, buying a profitable bakery, while perhaps a moneymaker, would be irrelevant to your primary mission, a distraction that doesn’t do anything to boost your core business image.
  4. Cultural Fit: You’re not just buying a company; you’re likely bringing on a new team of employees. How will they fit in to your company culture? Will they be a cohesive group? And then there is the question of overlap. Acquisitions make sense when there are economies of scale, which means you might have to layoff staff, for example, you might not need two accounting departments or multiple sales people in a certain region.
  5. Non-Compete Provisions: If you are buying out another entrepreneur, the last thing you want is for that person to use the windfall to launch a new competitor. Make sure that you work closely with your legal team to craft non-compete provisions for all key people at the target company, and don’t proceed unless these people all agree to the provisions.

Acquiring a company is an exciting and often quick way to grow your business.  In addition to reviewing financials, making plans for employee transitions, and checking legal documents, make sure you’re prepared financially to make it a success.


The Right and Wrong Times for Spending

Small companies must be very careful when it comes to spending, because they usually have finite resources. There are definitely good and bad times to expand your business, having to do with your own goals and the state of the overall economy. When done with foresight, spending can grow your market share and increase your long-term profitability. However, if you mistime an expansion, you may cripple or kill your small business.

Some Interesting Stats

If you want to start up a one-person business, you are not alone. In fact, you’ll be one of 14 million single-person businesses in the U.S., according to the Census Bureau. Only 180,000 have multiple locations, while 5 million have a single location. Of these, you want to be among the businesses that survive and grow. That means starting off on the right foot.

Getting Started

First things first. You will be spending some money when you first organize your small business. Even if you are running an at-home business, you will need capital for computer and communications gear, website development and hosting, and perhaps inventory and special equipment. Your initial goal is simply to break even. If you are finding that difficult to achieve, you must evaluate whether to throw more money into the enterprise or to call it quits. If you feel strongly that additional capital would boost you into profitability, think about a short-term business loan, such as the convenient ones available from IOU Financial.


Assuming you get over the initial hump, you will know it’s time to spend more money when you are constrained from making available sales, perhaps due to a lack of space, equipment, staff or inventory. For example, you might need to rent a commercial storage locker to hold your inventory, or perhaps you’ll need to lease office space and/or make leasehold improvements to the rented space.

What Do You Really Really Want?

It’s a bad time to expand your small business if you don’t want to take on the increased pressures and responsibilities that come along with growth. That means you have to be honest with yourself. Perhaps you are working at home simply because you can’t stand working in an office, hate hierarchies and cherish your freedom (your humble author included). If you are making a living wage this way, think twice about expansion, as it might completely upset your lifestyle and have you asking why you did it.

Assuming that you are an alpha type that really does want to expand, the next thing to gauge is the state of the economy. The wrong time to spend is when the country is heading into a recession. Inevitably, your business will slacken when the economy does, and you may be saddled with unnecessary and expensive capacity. Conversely, expanding at the end of a recession or the beginning of a growth period is great timing. Things are usually less expensive then, and you might be able to increase your size on the cheap. Interest rates may be lower then, so borrowing from a commercial lender as noted above can be very cost-efficient.

Things to Fret About

If and when you decide to expand, consider the following challenges:

  • Recruiting, supervising and paying additional personnel
  • The need for administrative services, such as bookkeeping, shipping, etc.
  • The logistics of a physical expansion, with all the costs this entails
  • The risk that the additional spending will not pay for itself in higher profits
  • The possibility of morphing into precisely the person you never wanted to be

There are millions of ways to achieve the American dream. You might need to spend money to get there, but knowing when and how much to shell out will depend on you, your market, your capital and the economy. Speak to us about increasing your capital and getting insights into your market and the economy. As for your own psychology, that’s up to you.

If you have a small business spending money on growth then you may be interested in learning why a small business loan might be right for you.  Learn more about IOU Financial and our loan offerings.