Why Online Lending Could Benefit You More Than a Bank Loan

All businesses need money to stay in business. Sometimes a loan makes the most sense to get access to the necessary funds. Unfortunately, many owners of small businesses think first of banks as the source for loans. Although there’s a bank around every corner, there are also many problems lurking around those corners as well. You see, banks are very selective about who they’ll lend to, and this way of doing business will continue into 2016 without letup. The reason is that there are increasingly stringent regulations placed upon banks regarding their loan quality and reserve requirements.


Let’s examine why banks can be such a hassle:

  • No, No, No! -Without doubt, this is the bankers’ favorite word. Just about the only way to get a bank loan is to not need the money. Remember, no banker ever got into trouble saying no to a loan request.
  • Lengthy Application Process– Banks must verify all the details and credentials about your business before offering a loan. This makes for a very long application process that leaves you slowly twisting in the wind.
  • Cumbersome– The task of providing all the details that banks ask for is really cumbersome, and from the business owner’s viewpoint, completely pointless.
  • Preference Given to Long Term, Established Businesses– If you only a year or two into your business, keep in mind that banks favor established businesses because they depend almost entirely on credit history before approving the loan.
  • Long List of Prerequisites to Qualify for the Loan– Banks keep lengthy lists of criteria that your business must satisfy before they OK the loan. It is often not possible to jump through all their hoops.
  • Entire Amount Not Granted– Banks are infamous for not agreeing to the full loan amount requested. They may condescend to offer 70 or 80 percent of the money you need. This complicates life for owners who need to run their businesses, since they then have to search around for the residual amount and find other lenders to fund the remainder.

Online Lending

Thankfully, you don’t have to enter this nightmare world to secure a business loan. On the forefront of the commercial lending industry stands IOU Financial, the better way to fund your small business. Why? Glad you asked:

  • Yes, Yes, Yes! – We like approving loans and will bend over backwards to find a way to Yes. We don’t have an inhuman loan committees standing over our shoulder questioning every decision we make. You deal directly with the decision maker, so you always know the score. And that score is: we pre-approve 85 percent of all applications! One reason is that, unlike banks, we value cash flow as much as credit.
  • Easy Peasy- We don’t rely on your credit history to decide on a loan. Therefore, we don’t need to spend tons of time investigating every aspect of your life. Our streamlined, online application process is super quick and easy. You can get funded in as little as 24 hours.
  • Affordable Rates- You’re not paying for a lot of bureaucracy when you borrow from us, and that allows us to keep our rates affordable. We are 50 percent cheaper than merchant cash advances. Furthermore, there are no upfront costs to qualify for a loan from us, and we charge simple interest so that you only pay interest on the unpaid balance, with no compounding.
  • Friendly, Not Scary- You repay a small portion of your loan every day, automatically deducted from your bank account. It’s pain-free and much friendlier than the monthly bill from the bank. You can also renew your loan once you pay back 40 percent of the principle, and there is never a prepayment penalty.

The next time you need a business loan, remember that you don’t have to go to a bank. Make the better choice – choose IOU Financial for loans up to $150,000.

Getting Your Business Through a Financial Crisis

No matter how well you run your business, you are never immune to a potential financial crisis, either within your own company or in the general economy. That’s why it makes sense to plan for the worst as you hope for the best. Here are some tips to help you navigate through a financial crisis:

  1. Know what to do if you suddenly need funding. A cash crunch can occur for many reasons, including a lull in sales, good sales but thin profits, poor cash management and forecasting, and suddenly higher costs. You should establish a relationship with a commercial lender, like IOU Financial, so that you can quickly arrange for a small business loan when you need it. There are many ways to boost your company’s credit, see here for a rundown of available avenues.
  2. Streamline your operations. Streamline by improving cash collections and extending payment distributions. You’ll find many vendors will accommodate you when you’re in a crisis, because it’s in their interests for you to remain a viable customer for their offerings.
  3. Check your margins. If sales are good but profits are low, then expenses are out of control. If you don’t have one, institute a purchasing policy and system to buy your supplies and inventory from the right vendors at the most competitive prices.
  4. Manage your budget. You do have a budget, don’t you? It should include a forecast of cash flows so that you can identify and prepare for upcoming shortages. By comparing estimates with actuals, you’ll know where you are spending too much and can take steps to fix the problem. A budget is really a collection of sub-budgets, covering areas such as sales, operations, and cash. Online apps are available to help you calculate and manage your cash flows – take advantage of these, especially if you don’t have a financial expert on retainer.
  5. Boost sales. If your sales volume is heading downward, perk it up with advertising, promotions, sales and specials. However, discounting hurts profit margins, so a better strategy is to find ways to upsell and cross-sell to your customers, offering them added value for a modest additional cost. One way to gain visibility is to participate in community events and charitable functions. Re-evaluate your offerings and get rid of unprofitable goods or services.
  6. Sell assets. Another quick way to raise cash is to factor your accounts receivable and auction your inventory. These solutions are not as good as obtaining a small business loan, because they can have long-lasting negative effects on your image and your customer relations. Nonetheless, it’s a tool that works and it’s there for you to use. If you have multiple locations, consider closing some of them.
  7. Hire a CPA. If you find yourself repeatedly running short of cash, perhaps you’re not managing your finances well. Hire a CPA to consult with you and prepare monthly statements so that you have a better idea of what problems your business is facing. It wouldn’t hurt to become more financially literate, if that’s a problem.
  8. If your company is small- to mid-sized and you don’t have a CFO, you can rent CFO services to strategically help by establishing financial discipline and performing analysis and planning with regard to your long-term financial needs.
  9. Consolidate and reduce your debt. If you owe money to many creditors inside and outside your business, get a consolidation small business loan so that you can manage your debt effectively and hopefully pay it off faster. IOU Financial provides daily automatic repayment to take the pain and confusion out of managing your debt.
  10. Raise credit payments. If you have a lot of late-paying customers, raise your credit requirements and tighten up your credit terms. That means you need to communicate and enforce late payment penalties.

As you can see, the common denominator of all these problems is cash, or lack thereof. Your ability to borrow and raise cash may be all that keeps you afloat during a financial crisis, so be prepared and work out a plan for when bad things happen to good businesses.

Disaster Plan: Why You Need It and How to Create It

Natural disasters can wreck your business. Hurricanes, earthquakes, volcano eruptions, meteor strikes, terrorist attacks, nuclear meltdowns, viral contagions and other mishaps can cause power outages or shut down key vendors, events that can cripple small businesses. According to the Institute for Business and Home Safety, 25 percent of businesses that experience a major disaster never reopen. That number rises to 40 to 60 percent when considering small businesses only. Furthermore, 90 percent of businesses fail within a year unless they resume operating within five days. The best defense is a properly drawn and frequently updated disaster plan. The plan should allow you to get back into operation quickly so that you can provide your offerings to your community.

The Big Picture

Your disaster plan needs to encompass the full range of contingencies that result from a natural or man-made disaster. The basic topics should include:

  • Identify your recovery team: Who will be in charge of crisis management, who will populate the recovery management team, how will you notify employees and maintain communications among all parties?
  • List types of disasters that are most likely: Rate the probability of each event’s occurrence so that you can concentrate on the most likely.
  • Identify alternate locations: Locate recovery and backup locations, and create relationships with your local disaster recovery service providers. Allocate space for a suitable emergency command center.
  • Create communications plans: Develop plans for internal and external communications, including an employee phone tree, emergency phone numbers, re-routing critical phones, and providing non-phone alternatives such as email.
  • Recovery plan for technology and data: Document all your computer technology and data backup facilities, including access to cloud-based files. Develop technical procedures to recover after interruptions, and layout which employees or vendors are responsible for restoring operation of critical technology. Ensure off-site backup and make plans for alternate computer centers.
  • Plan to restore operations: Each job function and employee responsibility should be well documented. Develop a plan to restore critical operations first and assign emergency management tasks to selected employees. You will need a way to track disaster costs and a person made responsible for this tracking. Review your business insurance to ensure it will help get you back into operation quickly.
  • Set up contingency financing: You will want to pre-qualify for commercial small business loans to help you pay the steep costs associated with disasters. Quick access to cash can make the difference between survival and bankruptcy.
  • Work out plans with supply chain: You will need to effectively communicate with suppliers and vendors, both local and distant, to ensure you can continue to receive critical materials and services. Identify all supply chain participants and store the list offsite. Share your plans with your vendors and create secondary relationships with alternate suppliers.
  • Ensure safety: Put together disaster recovery kits that include medical supplies, survival rations, flashlights, hand-crank radios and other emergency gear. Make sure you have an evacuation plan, perform drills and establish emergency shelter locations.
  • Test and maintain: Perform a simulation recovery at least once per year. Create systems to record the results of drills and evaluate results for improvements to the plan. Make sure you communicate any plan changes to employees.

Have Your “Go Bag” Ready

If you have to evacuate, you should be able to grab your “go bag” with a minimum of fuss or assembly. Suggested items include a fully charged laptop preloaded with all critical information, including emergency contacts, passwords, insurance policies, and floor plans if appropriate. It should also contain cash and credit cards, first aid supplies, critical medications, and basic office supplies.

If you’d like detailed guidance in setting up your business disaster plan, visit the U.S. Small Business Administration website.

Small Business Owners Scramble Over New Tax Form

The Affordable Care Act contains provisions that go into effect in 2016 pertaining to small businesses with no less than 50 full-time employees (or full-time equivalents). These rules are a continuation of ones already in place for businesses with at least 100 employees. Although 2016 is months away, the preparations are going on now, because employers have to record the monthly costs of employer-sponsored health plans for each employee. Yes, employers must track the out-of-pocket health care expenses that each employee faces, a difficult task to put it mildly.

Form 1095-C

The new 1095-C IRS form, “Employer-Provided Health Insurance Offer and Coverage,” is designed such that a copy is required for each employee, and just one employee’s data is recorded on each copy. The form is divided three sections:

Identification Information: The identity of the employer and employee, including name, address, Social Security Number and Employer Identification Number.

Employee Offer and Coverage: A three-row matrix with boxes for each month and for the total 12 months.

Row 1 reports special two-character codes (for example, 1A, 1B, etc.) that designate the form of coverage offered (or not offered) to the employee and to the employee’s dependents. If the employer offered the same coverage for all 12 months, it can record the appropriate code in the 12-month box alone. For instance, the employer might enter “1A” for a qualifying offer of minimum insurance coverage that fulfilled particular criteria.

Row 2 discloses the employee’s portion of the cheapest monthly premium for self-only minimum value coverage. This is how much the employee would have to pay to receive minimum coverage, rather than the amount the employee actually shelled out for choosing higher-quality coverage.

Row 3 provides a “safe harbor code” indicating why a particular employee did or didn’t get health care insurance for some or all of the year. For example, one reason would be that the person was not employed in certain months.

Covered Individuals: This part only covers employers who offer self-insured coverage. A six-row table pinpoints the months in which the employee and enrolled dependents were actually covered by the insurance. Each row names a single individual, including date of birth or Social Security number, followed by a set of monthly check boxes. If the person was covered for all 12 months, the employer just checks the 12-month box. The employer will need to use additional forms if the employee’s number of dependents exceeds five.

Torment or Nightmare?

However you slice it, Form 1095-C and the toil it requires is no picnic. The IRS instructions for the form number 14 pages of small print, which is better than the 84-pages of rules put out by the Department of the Treasury in 2014. Exacerbating the situation, only a handful of tax-preparation services are offering to prepare these forms for clients. Without available outsourcing, a small business’ bookkeeper will need a good spreadsheet program to record all the necessary data.. That’s daunting enough when done on a month-by-month basis as 2015 evolves, but it turns into a nightmarish torment if employers wait until year’s end to start the process. This explains why employers are scrambling now to record all the mandatory data while it’s readily available.

Intuit Steps Aside

Intuit, producer of the best-selling QuickBooks and TurboTax software, has chosen to not support Form 1095-C. Intuit spokesperson Stephen Sharpe explains, “The vast majority of our customers are not required to comply with this mandate, and the data required by these forms is not fully collected in our payroll application.” Thanks a lot! However, a few payroll services are delivering outsourced support for the form. One industry analyst estimated representative fees to be about $400 to initiate the service and $0.40 to do the processing for each employee. That might sound somewhat dear, but plenty of small business owners will decide that doing it themselves is much, much worse.

Don’t feel overwhelmed. Get ahead of the game and visit this link to watch this FREE webinar from one of the world’s largest accounting firms, PWC. See the webinar to explore more details on the ACA reporting requirements and some additional technical details to get your business prepared for 2016.

Myth vs. Fact: The Impact of Minimum Wage And Small Business

There are many myths surrounding the effects of minimum wage rules upon small businesses. Often, you’ll hear some say they “can’t afford” to pay their workers minimum wage or that customers would be happier if all employees were provided a raise in minimum wage. Fortunately, the topic has been the subject of dozens of academic studies in an effort to detect and quantify the impact of minimum wage laws. Let’s dispel some myths about this impact:

Only teens benefit from minimum wages.

False: 88 percent of those who benefit from the minimum wage and any increases in it are at least 20 years old, not teenagers looking for spending money.


Minimum wage laws only affect part-time workers.

False: Full-time workers make up about 53 percent of the minimum wage worker pool.


Increases in the federal minimum wage are automatically tied to inflation.

False: Some states have adopted this practice, but not the federal government. Some in Washington would like to adopt this rule, but the chances seem remote.


Young workers are exempt from the minimum wage laws.

False: The exemption for workers under 20 years old extends for only the first 90 days of consecutive employment within the year.


Raising minimum wage gives small business happier customers.

False: A rise in labor costs will cause job loss or the increase the price of the product/service to the customer. The business owner could take one of these measures to offset his added costs, both of these resulting in less satisfied customers, from understaffing, or increased prices.


Most small business owners do not support the minimum wage.

False: A 2014 survey of business owners found 60 percent support for the minimum wage. Reasons for support included an increase in consumer purchasing power, a boost to the economy, higher productivity and happier customers due to stable employees.


Restaurants would lose out if the minimum wage for tips was increased.

False: California has one of the highest minimum tip wages and its restaurant sales are well above average. San Francisco has one of the highest minimum wages for restaurant workers in the country, but despite (or because of) this, the city’s restaurants have had positive job growth for years.


If workers had higher incomes then poverty would be lowered.

False: Many minimum wage jobs are in competitive sectors of the economy, meaning these businesses are already struggling to remain viable.


Tipped employees are not affected by minimum wage.

False: The sum of wages and tips must equal the minimum wage. If they don’t, employers must make up the difference.


Minimum wage will directly affect the rise or fall of unemployment.

False: Unemployment is variable based on a variety of factors. System Dynamics Modeling (The Field of System Dynamics) suggests that our brains focus in a straight-line causation when thinking about these types of social problems. Instead of increasing the incomes of the poor through legislation, efforts should focus on stimulating demand for labor so that firms pay more by choice.


The federal minimum is too high by historical standards.

False: When evaluating the minimum wage over time, you must take inflation into account. Today, the minimum wage is $7.25 per hour, compared to $3.35 an hour in 1981. However, the current minimum wage would have to exceed $11 an hour to have the same buying power it did in 1981.


Minimum wage employees are stuck at that wage and need a legislated increase to earn a raise.

False: Research shows that the vast majority of employees who start at the minimum wage earn a raise in their first one to 12 months on the job.


It’s quite apparent that the minimum wage laws are good for business, good for workers and good for the economy, it’s just a tricky balancing act. It also allows us to see when minimum wage discussions arise, it is often just a cover for the actual problems at hand, stimulating employment. For this reason, we can all thank our local small business owners for doing just that.

Learn more about what IOU Financial can do for the financial challenges small business owners face on our small business loans page.



Quick Tax Tips For Small Business

Let’s stipulate from the start that a small business should always be preparing for tax season. There should never be a time when you aren’t maintaining proper records and taking full advantage of the tax laws. When you wait until the last minute, you make the process more complicated and may discover tax benefits you let slip by in the previous year.

Nonetheless, business people are quite busy and you may find yourself only now organizing for taxes. In this article, we’ll first discuss a few general steps to take for every tax year, and then follow with specific details for 2015.

General Tax Tips

1.  Unless you are specifically trained in tax planning and preparation, hire a professional — an accountant and/or tax attorney –to help with your taxes. These worthies spend great amounts of time keeping up with the complex tax laws. A professional will often discover tax breaks, credits and deductions you might have overlooked. In fact, it’s very likely your tax savings will more than repay the cost of using a pro, which, by the way, is a tax-deductible expense.

2.  Stay informed about the latest changes to tax laws that affect small businesses. It’s a good idea to peruse the New York Times business section or the Wall Street Journal every weekday for the latest news from Congress and the courts about tax legislation — if it’s important, the papers will report it. They are available online at a quite reasonable (and deductible) price, as is the weekly magazine The Economist, our pick for the best financial periodical on the planet.

3.  Refrain from making assumptions about pending legislation. Don’t count on some tax break being passed simply because Congress is debating it. Often, a new session of Congress enacts retroactive tax laws, like extensions of expiring breaks (see below). Your tax professional will be able to advise you on the latest status of pending legislation and ways it might affect you.

4.  Identify sources of funding if you think you’ll need to pay a significant tax bill. For example, line up a commercial loan to help pay your taxes without dipping into your working capital. You don’t want to forgo inventory purchases because you need the money to pay taxes. Contact IOU Financial for full details regarding a convenient, low cost business loan.

Special Tax Concerns

There are a few important items pertaining to your 2014 tax return as well as new requirements for 2015.

Tax Extenders
Congress came through in 2014 and extended Section 179 depreciation rules, including bonus depreciation. Basically, you can immediately expense 2014 purchases of up to $500K for qualifying equipment and software. Alas, it isn’t at all clear whether these extenders will be renewed for 2015, although an important House vote is due today, Feb 4. Congress is mulling over whether to make Section 179 deductions permanent. Another provision under consideration is to cut in half the 10-year waiting period for converting a C corporation to an S. Stay posted for the latest news!

Affordable Care Act
Starting in 2015, businesses with at least 100 employees have to provide 70 percent of their full-time employees (or equivalents) with health insurance. The penalty for non-compliance is as high as $2,000 per employee. Be aware that in 2016, the minimum percentage of employees covered rises to 95 percent and the minimum number of employees drops to 50. You have to include the cost of each employee’s health coverage on Form W-2, or pay a $200 fine per employee. Consult with an accountant or insurance expert to ensure that the coverage you offer satisfies the minimum standards of the Affordable Care Act.

Online Sales
The states are eyeing online merchants as their next source of tax revenue. Although stalled in 2014, the so-called Marketplace Fairness Act will again be debated this year. If you gross more than $1 million a year from a virtual storefront, your state will want you to pay sales tax. This fight should be a doozy.

Proposed Credit Union Small Business Jobs Creation Act – Will it Help?

I read this article recently about the Credit Union Small Business Jobs Creation Act, H.R. 688, which would raise the cap on loans credit unions can make to their small business members from the current 12.25 % of assets to 27.5 % of assets. Sounds like good news for small business owners, right?

While the article applauds the efforts, as do I, I wouldn’t give it a standing ovation. Rather, it is more along the lines of a polite Masters Golf Clap. While I agree that anything the government can do to make progress and loosen the regulatory vice grip on banks and credit unions, they absolutely should move forward in doing. However, the numbers represented in the article do not tell the whole story.

For example: According to the article, there are 140 credit unions bumping into the business lending “cap.” My guess (from the government support) would be that those are probably on the east and west coasts. There are another 400 that are either somewhat near or not even close to the cap. Therefore, raising the cap isn’t going to push a credit union with a loan ratio of 4% up to the cap of 27.5%. So, while raising the cap to 27.5% and also getting credit unions to lend up to this number, would put another $13 billion on the street, the truth is – it won’t happen.

On the bright side, it may free up a few additional billion to small businesses, which again deserves applause. But small businesses are so under served that a couple billion over the course of a year is really like buying a pack of energy efficient light bulbs for your house and expecting to solve the world’s energy problems.

Small Business Owners Find Alternative Solutions For Capital

A recent USA Today article featuring IOU Financial examined unconventional lending sources for small business. Even for healthy businesses, those with positive cash flow and strong financial history, getting loan approval from a traditional bank is difficult. Whether the size of the loan is too small or the cost to process and fund it is too expensive, there is a gap between the needs of the small business community and the ability of banks to fulfill them.

Today, small businesses have more alternative options than ever before; however, the cost associated with these can be prohibitive. As highlighted in the article, many small businesses have the desire to grow but need the capital to take advantage of the opportunity. We see viable businesses every day that have positive cash flow, a solid customer base, and rave reviews but lack the traditional assets or collateral needed to secure funding from a bank. What has made our work with small businesses so rewarding as the best bank alternative, is that they can move forward on achieving their business goals much more quickly with our easy, secure, online application and approval within days instead of weeks or months.

Tailored for retail type businesses, IOU Financial is able to make low-cost loans at low risk through advanced technology that makes fast, accurate, and fair assessments of all applicants, giving small businesses the alternative they need to seize growth opportunities fast. Small businesses drive the American economy, and we’re honored to help fuel their ambition.

3 Steps to a Recession Proof Business

Some businesses actually thrive in a recession. Here are a few that may surprise you:

Cosmetics:  When things get tough, women look for more inexpensive ways to pamper themselves like cosmetics and nail salons. In fact, some economists point to rising lipstick sales as a sure sign of a sagging economy.

Dry cleaners: People still need to look professional at their jobs and need their clothes cleaned regularly, especially those going on interviews.

Hair salons: Grooming is considered a NEED. Hair salons that cater to families are the most recession proof.

Residential and commercial cleaning services: As our lives get busier, cleaning services have become more of a “need” and less of a “want.”

Home improvement companies: A downturn in the economy means people won’t be buying new homes for a while, so they have no choice but to work on their current home.

Doctors and pharmacies:  People get sick no matter what the economy is doing. And, during a recession, stress levels are much higher and since stress depletes the immune system, these businesses may actually thrive in a challenging economy.

Here are three ideas to recession proof your business: 

1. Focus on your marketing. Advertising is the first thing that businesses tend to cut out but that is a big mistake. Marketing doesn’t have to be costly – use the resources you have. Ask your front desk staff to make calls to inactive clients or those you haven’t seen in a while. It doesn’t have to be a hard sale call, just let them know of available appointments or special offers that might give them an incentive to come back into your store. You can also have some kind of event. Pool resources by partnering with another neighboring store to share email or mailing lists and come up with an event that builds excitement and gets traffic back into your store or office.

2. Use “Add-On” to create more revenue. Train your staff to ask for specific services – this is one thing fast food restaurants do really well. For example, “Would you like to biggie size that fry?” Just adding one small item to each purchase can give you a boost.

3. In a tough economy, prices are more of a consideration than in normal times. Don’t cut all of your services, but be aware of what your competition is charging and come in a little less. Most economists recommend cutting prices on some items by 15-20% than what you would charge in a normal economy. With some creativity and altering your daily tasks, you too can have a business that booms in any economy.

Read more: http://www.brighthub.com/office/entrepreneurs/articles/46396.aspx#ixzz1K68qbWlb