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Small Business Finance Guides and Resources

Here’s Why Building Up Savings Is Important

Savings is important to pay for potential  emergencies and extreme situations that may happen.  

Figures from a recent GOBankingRates survey indicate that 33% of Americans have a hundred dollars or fewer in their savings account in 2023. The same amount was in their savings fund the previous year. Inflation, higher costs of living, expensive food bills, and gas prices – all these factors contribute to the struggle to set aside money. 

Financial Security and Stability

Money stashed away is key to providing financial security and stability, especially during emergencies and worst-case scenarios. Say you fell or tripped on unsafe premises causing fractures, sprains, and other injuries which may be mild or severe. Your condition requires medical treatment, medications, and rehabilitation. It also implies taking time off work. Personal injuries can occur in various situations and impact a person’s well-being, quality of life, and ability to work. This is why hiring personal injury lawyers  can help offset financial loss. They can seek compensation on your behalf for damages caused by the injury.

In the meantime, you might need to dip in your personal savings to help pay for unforeseen medical bills or prescription medications. While health insurance may cover expenses related to injuries regardless of the place where the accident occurred,  you might still need to pay out-of-pocket for unexpected costs such as ambulance or emergency room fees, specialist consultations, diagnostic imaging, medical equipment and aids, or temporary childcare. Furthermore, loss of income can have a significant impact on the financial stability forcing you to use money that has been squirreled away. Thus, emergency savings can help cover these expenses without taking a loan or credit that will potentially destabilize an individual’s financial security.

Ways to Start Building Up Savings or Emergency Fund

Regrettably, a considerable portion of the American population lacks a financial safety net to rely on during times of financial hardship. The harsh reality is that the soaring costs of essential goods and services have pushed many individuals into financial distress. Living from one paycheck to the next often leaves no room for savings, and even those who have managed to set aside some funds find themselves dipping into their savings to cope with the relentless rise in prices.

While saving money can be a complex and challenging endeavor, it is entirely feasible to reverse your financial situation and gradually nurture your savings.

To embark on your saving journey, it is imperative to first tackle any crippling debts. Implementing a well-structured budgeting strategy is an effective approach to creating a stringent plan for managing your expenses, including debt repayment.

Prioritizing the settlement of high-interest loans can free up financial resources that can then be channeled towards building your savings.

Another prudent step is to exercise caution when it comes to the use of credit cards, and in some cases, it might be wise to avoid using them altogether, as they can easily lead to the accumulation of substantial debts. As an initial stride toward building your savings, consider establishing an emergency fund equivalent to at least one month’s worth of living expenses.

Additionally, automating transfers from your checking account to your savings account on payday can be a valuable strategy, as it removes the temptation to spend on non-essential items. Any unexpected windfalls or extra income should also be promptly deposited into your savings account.

Savings play a pivotal role in achieving financial independence, overall well-being, and peace of mind. While it may be a demanding undertaking, maintaining consistency and discipline in your financial habits can ultimately lead to the creation of substantial reserves over time.

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Guides and Resources Small Business Finance

Charting Your Course Towards Financial Wins – Turn the Tide on Debt and Innovate Your Strategies

Charting Your Course Towards Financial Wins

Tackling debt and credit management can seem mega daunting–like you’re wrestling a tough opponent. At times, it feels like you’re just scratching the surface of what seems like a never-ending puzzle. Yet, the year-end of 2023 and the whole of 2024 are shaping up to be years of opportunities to get on top of your finances. It will feel like you’re steering a ship at sea without a compass if you’re not prepared, however even the best planners understand that a fluid strategy is sometimes required. As David Gokhshtein, renowned financial expert and crypto advocate highlights, “The market is unpredictable, and you need to adapt to its changes. While planning is paramount, going with the flow sometimes reaps rewards.”

Step Up and Take Control of Your Finances

If it feels like you’ve made a mess of things, don’t sweat it. There’s always a ray of hope because now, you’re in control. Getting professional help might seem pricey, yet entrusting experts in debt and credit management could be, honestly, the smartest choice you’ve ever made.

 Enlist a Foreclosure Attorney 

Don’t force yourself into a difficult corner when you have other options. One solution is to seek advice from a foreclosure attorney. Think of it like a hidden cheat code, particularly when it feels like you’ve missed your shot–there’s still a glimmer of hope. Expert advice can highlight alternatives that you might not have even considered.

A study published in the American Economic Review (“Foreclosure, Mitigation, and Deterrence,” April 2023) reinforces this suggestion. Homeowners who counselled with a foreclosure attorney had a 60% better chance of dodging foreclosure. These individuals with legal representation managed to achieve a mortgage modification on favourable terms, thus saving their homes, as compared to those who tried to mitigate foreclosure single-handedly.

The study also reveals that experienced foreclosure attorneys positively impacted factors like delayed foreclosure timelines, giving their clients precious time to rebuild finances and even getting deficiency judgements waived.

To sum it up — having a foreclosure attorney on your team can save the anguish of losing your home and can fast-track your journey back to financial stability. It’s like a famous quote says, ‘when you’ve hit a wall, there’s always another way around it,’ often a foreclosure attorney can guide you in finding that path.

The Rule of Thumb: Underestimate Then Overdeliver

Another financial maestro, Hannah Rounds, suggests, “Don’t bite off more than you can chew.” In other words, don’t stress over past mistakes because life’s packed with fresh opportunities. Prior to committing to large expenses or investments, Rounds emphasises not to overstretch your finances.

When Debt Becomes a Tough Cookie

If you’re finding it really rough, reconsider your strategic approach. That might mean going back to the drawing board when it feels like you’ve hit a brick wall. It’s prime time to review your income, expenditures and commitments.

Maintain Financial Discipline

However, don’t throw caution to the wind just yet. Just because you’ve been grinding doesn’t mean you should spend like there’s no tomorrow. Keep in mind that financial discipline isn’t boring, it’s golden. Always remember the wisdom learned during difficult periods.

Making solid financial decisions might feel like not scoring high enough in the short term. But learning how to effectively manage debt and credit isn’t a 100 meter-dash, it’s a marathon. Right? So, give yourself a break, be patient, and take it step by step. You got this!

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Small Business Finance Small Business Trends

How Effective Business Moves from the ’90s Still Totally Work

How Effective Business Moves from the ’90s Still Totally Work

It’s not like the ’90s was a dark age for businesses – on the contrary; many of the Effective Business strategies small businesses used back then still work like a charm today! It’s the ultimate trip down memory lane, only instead of boy bands and neon tracksuits, we’ve got ROI and venture capital easing into that nostalgia ride.

The Enduring Appeal of Old School Small Business Financing

Despite the digitization and the convenience of online applications, the old-school methods of small business financing are still a strong contender in the market. With the need for more transparency and reliability, these traditional strategies have been known to yield fruitful results.

According to a report by Fundera, a resounding 75% of small businesses are leaning towards traditional bank loans, illustrating just how these historic methodologies still pack a solid punch.

The ’90s Phenomenon: Effective Business Moves from the ’90s 

Back in the ’90s, it was all very raw and new. Valery Belloso, a financial expert, comments, “The ’90s brought in the trend of using venture capital investments.” She goes on to explain just why they were super popular: “There was this whole kerfuffle around leveraging big bucks from external investors.”

Small Business Financing: From Yesteryears to Now

Fast forward to now, and small businesses are still using multiple strategies like bootstrapping, taking loans, crowdfunding, invoice financing, and venture capital. The last one, venture capital, is still very popular because it can provide funds for businesses that are too new for bank loans.

“We see a lot of tech-oriented startups and small businesses turning to venture capital right now,” Belloso says. “There’s this thirst for innovation and these venture capitalists have a wealth of experience and global networks that can take these businesses to amazing new heights.”

Venture capital investments aren’t just about funding. It’s akin to a mentor you’d find — providing businesses with access to industry expertise, advice, and strategic guidance. Plus, they also boost a business’s reputation – because if a venture capitalist has put money into your business, you must be doing something right!

Despite the intense competition and high risks, venture capital financing still works because it remains one of the few means of securing significant funds without the immediate need for payback. It’s not just about the cash-in-hand, but the immense resources and networks they provide, catapulting businesses to break new ground.

Businesses of today are increasingly turning to venture capital, proving that this ’90s financing strategy might be old school, but it’s totally still in session. It’s like the battle of the bands in the corporate world – with a mix of high risks and high rewards, and may the best ones win!

Lean Portfolio Management: Lean, but Absolutely Not Mean

Remember that amazing game of Jenga, where you had to remove one block at a time and balance the entire tower? One wrong move and – boom! – the whole thing topples. That’s exactly how lean portfolio management works minus the boom. It’s all about balance and flexibility to adapt. With a dash of candor and transparency, lean portfolio management actually helps businesses flex their resources and there’s practically no room for waste. It’s like the ultimate de-clutter for your business.

’90s Financing is Still in Vogue

The inimitable charm of the ’90s resonates not only in our wardrobes but also in the way we do business. Who could’ve imagined that amidst the fast-paced technological outburst and the increasingly digitized financial ecosystem, these vintage small business financing strategies would stand the test of time?

It’s like a sweet symphony orchestrated in the bygone years, humming the melody of success, the rhythm of prosperity. The robustness of these timeless financing strategies is a testament to their effectiveness, which explains why we’re still jamming to their tunes today.

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Small Business Finance Small Business Trends

Factors Beyond Bad Credit That Can Affect Personal Loan Approval

Digital Transformation in Finance – Trends to Watch Out For

Around three-quarters of all banks and credit unions in the US launched a digital transformation initiative in 2022, with another 15% expressing their plans to do so—as per the What’s Going On in Banking Study. The goals of financial institutions are clear: greater personal loan approval, reductions in operational expenses, and increases in payments revenue and other non-interest income. How are they achieving their aims, and what are the dominant trends that will be shaping the near future of digital transformation in the finance sector?

Conversational AI

Senior Forbes contributor, Ron Shevlin, argues that financial institutions need to make conversational AI a key component of their digital strategy. This is because abandonment rates for digital product applications in banking are notoriously high. Consumers are often confused about the information they are required to provide, and banks aren’t following up on their reasons for abandonment quickly enough. AI can bridge the communication gap while also codifying and storing data far more quickly than human beings can. What’s more, chatbots can be easily upside without the need for additional training hours, while also offering optimized service costs. As such, savvy financial institutions are employing smart bots for everything from providing information to selling products, displaying product benefits, and executing tasks (such as informing customers of their application status).

Blockchain Technology

Blockchain provides financial institutions with a cutting-edge, safe means of identifying, recording, storing, and managing assets, and it also has an important role to play in investment. It is easy to see the extent to which this technology can streamline financial processes. For instance, complex tasks such as matching payments to invoices can be automated, thus reducing the time and energy involved in carrying out this task. It can also be used to help different financial systems to compare data on a specific company. This shared bank of data can be used to improve decision-making processes by providing a more complete picture of a company’s financial performance. Blockchain has the ability to revolutionize access to banking service, knocking down many current barriers to opening accounts. It can additionally be used to provide customers with access to more novel means of finance, including microfinance. Because it tracks all assets, transfers, and ownership, blockchain is refreshingly transparent. What’s more, it reduces operational costs and provides cutting-edge protecting against cyber criminals.

 Smart Mortgages

Online mortgages are the order of the day, and new trends are making digital borrowing easier, quicker, and safer. Top companies are offering clients features such as importer tools, which allow users to receive real-time interest rates in minutes. Savvy companies are also looking into technologies such as blockchain-based contracts, AI chatbot advisors, cloud computing, and robotic process automation (RPA). The latter is a technology that empowers robots to perform rule-based workflows. RPA is ideal for reducing the time associated with mortgage applications, since it can be used to audit loan documents, input applicant data into systems, and upload files. Deloitte’s survey shows RPA adoption reaches the breakeven point in less than twelve months. It also leads to 90 percent improved accuracy, 86 percent increased productivity, and 92 percent greater compliance.

Real-Time Analytics

The Finance 2025 Report by Deloitte indicates that current financial reporting systems will change. Instead of being provided with monthly or trimester reports, financial institutions and clients will be looking at real-time data, analysis, and charts. In other words, the financial health of companies will be accessible without the need for reporting intervals, empowering financial institutions to make important decisions faster. Currently, the impacts of data sprawl are vast. For instance, companies that work with multiple financial institutions have to work with multiple bank statements, often provided in various file formats. All of this makes it more difficult to convert data into insights. Because they lack a unified data store, companies may make decisions based on inaccurate information. Having access to real-time data boosts payment efficiency and provides real-time access to a consolidated ledger that is accessible to an entire organization.

Digital transformation is a major priority of most financial institutions, and those that have completed (or are close to completion of) their transformation are reaping big rewards. Just a few trends that will demand continuous improvement include conversational AI, blockchain technology, and smart mortgages. Real time analytics, meanwhile, is a vital means through which to reduce error margins and provide updated information that financial institutions and clients alike can base decisions on.

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Small Business Finance Small Business Trends

Basic Steps to Starting an LLC in Florida Before Applying for a Business Loan

What do you need to know before Starting an LLC in Florida?

Despite the turmoil that surrounds Florida in terms of political division, it has ranked as the 8th best state for business in the United States for 2023. This is because it has the best-ranked economy among all the states, has seen a 4% GDP growth, and has a steadily increasing job sector with more opportunities for workers. 

It’s a great time to start your own business in Florida, with an LLC being a very promising entity for new entrepreneurs. Of course, you may want to take out a GoKapital business loan to enable this pursuit. After all, Florida still ranks middle-of-the-pack in terms of business friendliness and has an even lower ranking in terms of cost of living. At the very least, the state does not impose a minimum capital for you to file for LLC formation. 

Before you take out your lines of credit and try to access a capital fund, it’s best to do your research on starting an LLC in Florida first. Thankfully, the steps to kicking things off legally aren’t hard to follow. 

Name your Business

It may seem like an obvious step, but you need to make sure that you have a proper business name for your LLC. This is what distinguishes you from your competitors and will need to be handled with care to avoid naming disputes. It’s also important to remember that Florida-based LLCs are required to mention LLC terminology in their name. 

You also need to avoid restricted terms that are used by the government or require special permission. For instance, you can’t have “doctor” in your LLC name unless you are a licensed medical practitioner. You can try to get authorization from the Florida Board of Medicine, but this would be under review on whether or not you actually need to have that name. Basically, any name that can be misconstrued or considered deceptive will not work in the state. 

Consider an LLC Service

Although you can technically do the entire LLC formation process yourself, it can be a lot easier if you just use a commercial LLC formation service. Although it does come with extra fees, it could be worth the investment to ensure that you get all compliance matters done efficiently and accurately. 

If you’re unsure or simply intimidated by the prospect of handling all those procedures, using a service like Zenbusiness or Incfile can simplify everything. This is also a good option if you want the ease of doing practically everything online. Using such a service means they will usually get your operating agreements, reserve your name, and file LLC formation requirements on your behalf. 

Get a Registered Agent

Florida legally requires every business entity to have a registered agent in order to operate in the state. The registered agent must also operate in the same state as the business and will handle the service of process, accept legal documents and tax notices from the government, and serve as a point of communication between the public and the business. 

So, any tax filing, returns, and communications with the Internal Revenue Service (IRS) will also be directed to your registered agent. They will then be responsible for keeping a copy and sending over the documents to the business owner promptly.

Make Your LLC Operating Structure

Technically, you aren’t actually legally obligated to create an operating agreement for your LLC. That said, it’s better to do so anyway as this helps avoid disputes and minimizes any risks with managing liabilities. 

One of the benefits of forming an LLC in Florida is that the state allows flexible operating structures. For business owners, this means management and operational specifics can truly be customized to match the nature of your business. This also means you have more agility if you ever need to make adjustments down the line.

Meet All Compliance Filing Requirements

Now comes the point where you must file all the paperwork to hit compliance requirements and be legally considered an LLC. The first point of focus for you should be the Florida Articles of Organization. If you choose to go the route of an LLC forming service, they will likely guide you through this whole process and handle most of the filing. If you are doing it yourself, then you will need to submit the paperwork to the Florida Department of State online or in person. You can expect to pay $160 in total for filing fees, a certified copy, and a Certificate of Status.

From there, you also need to apply for an employer identification number (EIN) and any business licenses and permits that are relevant to your services or products. Florida has seen a lot of growth in tons of sectors that point to its growing reputation as a bustling economic space. In terms of permits for authorized structures, Florida issues the most permits along with Texas and California.

Open Your Business Bank Account

Finally, you will want to open a business bank account before you actually start operating. This is a must for you to separate your business funds from your personal funds. The structure of an LLC is already meant to minimize your liability, hence the name. Basically, you just want to cover all your bases so that your assets won’t be used to satisfy any debts that may be incurred by your business. 

Having a separate bank account for your business also makes tax filing easier and helps with maintaining a healthy cash flow. A study by Intuit revealed that 61% of small businesses around the world have cash flow problems, and many businesses end up struggling because of an inability to recover from these struggles. Creating a dedicated account just helps mitigate these risks.

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Small Business Finance

Underwriting Small Business Loans: How Does It Work?

Underwriting Small Business Loans: How Does It Work?

Obtaining a small business loan, or any loan, often involves encountering the terms “underwriter” and “underwriting.” You might have heard phrases like “Your loan application is in underwriting” or “The underwriter is reviewing your application.” While this step is crucial in the loan process, it can sometimes feel like your application disappears into a mysterious void, leaving you uncertain about its progress.

Let’s shed light on the underwriting process for small business loans, understanding its significance, how it operates, and ways to enhance your loan application for a smoother experience.

The Key Concerns of Underwriters

Though not explicitly stated, underwriters focus on three critical questions when evaluating small business loans:

  • Can your business comfortably repay the loan? In other words, does your business possess the financial capacity to handle the loan and manage regular debt payments?
  • Will your business indeed repay the loan? This query delves into the reliability of your business to make timely and consistent periodic payments. Some businesses may have the means but struggle to maintain a consistent payment schedule.
  • How prepared is your business for unforeseen circumstances? Underwriters consider whether you have contingency plans and can continue making loan payments if unexpected challenges arise.

When an underwriter reviews your loan application, they seek answers to these fundamental questions. The presence or absence of these answers significantly impacts the loan approval decision. Knowing what an underwriter looks for allows you to include all pertinent information that helps address these crucial concerns.

Remember that every lender has unique criteria for underwriting small business loans. While no universal standard applies to all lenders, they generally assess similar aspects of your business. However, different lenders may weigh certain factors differently during their evaluation process.

Decoding the Information Underwriters Seek in Loan Applications

Gone are the days when underwriters manually reviewed each loan application. Nowadays, most business lenders employ automated processes driven by proprietary algorithms and formulas to aid their underwriting small business loans decisions. Despite automation, human underwriters still play a pivotal role in deciding whether to accept or reject a loan application.

When underwriters evaluate your loan application, several key factors come under their scrutiny:

  1. Business Revenue

The monthly or annual revenue of your business is a vital consideration. If your revenue cannot support regular loan payments, approval becomes unlikely. Many lenders have a revenue-to-loan ratio, typically lending up to 10% of your annual revenues or 50-100% of your monthly gross revenue. Existing business loans or credit lines may influence this amount.

  1. Personal Credit Score

For most small business owners in the United States, their credit score affects the overall creditworthiness of their business.

Different lenders have varying credit score requirements; traditional lenders might seek scores in the 700s, while online lenders may accept scores as low as 500. Remember that lower personal credit scores often result in higher financing costs.

  1. Collateral

While not all lenders demand collateral, many banks and the Small Business Administration (SBA) do. The SBA might not insist on full collateralization but will require all available collateral.

Online lenders might apply a general lien on business assets. Personal guarantees on small business loans are common, even with traditional banks.

  1. Additional Sources of Repayment

Underwriters may explore other income streams you could use to repay the loan, such as a guarantor, insurance policy, or supplementary income from another job.

  1. Personal Equity

Underwriters may show interest in how much your funds are invested in the business. Demonstrating personal investment in the business signifies the commitment and a vested interest in the venture’s success.

  1. Debt Service Coverage Ratio

This calculation involves assessing your business’s income concerning its existing financing. A ratio below 1.25 could hinder obtaining further financing.

  1. Debt-to-Asset Ratio

Particularly relevant when no collateral requirement exists. It ensures you have sufficient assets to cover the loan in case of default.

  1. Loan-to-Value Ratio

Pertains to loans requiring collateral, indicating that the collateral’s value is equal to or ideally exceeds the loan amount by at least 20%.

  1. Net-Worth-to-Loan-Size Ratio

This ratio compares your assets’ value to the loan amount, demonstrating your capacity to afford the loan.

While specific underwriting requirements vary among lenders, being well-prepared with this information and able to respond accurately to any queries will ensure you are ready to navigate the underwriting small business loans process confidently.

Key Red Flags that Underwriters Watch Out For

Understanding what underwriters typically seek in loan applications is essential, but it’s equally crucial to be aware of potential deal killers that could lead to automatic application denials. Here’s a list of common red flags that underwriters pay close attention to:

  1. Unreported Recent Business Cash Advances or Loans: Concealing cash advances or loans obtained recently but not disclosed in the month-to-date (MTD) bank activity can raise concerns and jeopardize approval.
  2. Excessive Negative Days in MTD Bank Activity: Many negative days in the MTD bank activity printout might raise suspicion and affect the underwriting small business loans decision.
  3. Criminal Background History: A criminal record could be a deal breaker, depending on the lender’s policies and the severity of the offenses.
  4. Undisclosed Tax Liens or Unresolved Tax Liabilities: Unreported tax liens or those without a payment plan can be considered signs of financial instability.
  5. Recent Bankruptcy or Ongoing Bankruptcy Proceedings: A bankruptcy filed within the last six months or ongoing bankruptcy can lead to denial of application. However, a discharged bankruptcy beyond six months may not always disqualify a borrower, depending on the lender.
  6. Unsatisfied Excessive or Large Judgments: Unresolved judgments that indicate financial disputes or liabilities may raise concerns.
  7. Less than 50% Ownership (depending on the lender): In some cases, ownership stakes below 50% might be viewed unfavorably by certain lenders.
  8. Major Drop in Revenue: A significant decline in business revenue may raise doubts about the company’s financial stability and ability to repay the loan.
  9. Negative Landlord References: Negative references from landlords, such as months of unpaid rent or eviction proceedings, may be detrimental to the application.
  10. Undisclosed Defaulted or Restructured Business Loans or Cash Advances: Concealing past defaults or restructured business loans and cash advances can damage your loan prospects.

Accuracy is of paramount importance when completing your loan application. Attempting to deceive the underwriter with an error-riddled or fraudulent application is unlikely to go unnoticed. Moreover, underwriters are skilled at discovering and verifying data, making it essential to provide accurate and verifiable information.

It’s evident that data plays a central role in loan decisions, but it must be precise and corroborated. An adept underwriter will diligently uncover and verify the information provided to ensure a fair and informed decision-making process.

Tips for Navigating the Small Business Loan Underwriting Process

If you’re seeking a small business loan, you can implement a few strategies before and during the underwriting small business loans process to increase your chances of approval. These tips will help ensure a smooth process and secure your financing.

  1. Channel All Income to Your Business Bank Account – To demonstrate stability and sufficient cash flow, deposit all your income into your business bank account. That includes credit card sales and cash transactions. Doing so signals lenders that you have the necessary funds to meet your loan payments. Keeping your business bank account positive throughout the underwriting small business loans process is also important.
  2. Prioritize Liquidity – Liquidity is crucial in small business loan underwriting. Aim to showcase a strong reserve of liquid assets, such as cash, stocks, accounts receivable, and inventory. Having visible liquidity reassures lenders that you can handle unexpected challenges and repay the loan comfortably.
  3. Maintain Consistent Revenue Streams – While sporadic revenue increases are welcome, lenders prefer to see a consistent flow of revenue. That demonstrates the stability and reliability of your business’s income. Strive for steady growth and reliable revenue sources to instill confidence in lenders.
  4. Ensure Accuracy in Documentation – Lenders meticulously review documents, cross-check information, and verify accuracy. Attempting to mislead or hide information is unlikely to succeed. Reporting your debt, revenue, and bank accounts accurately is crucial. Any discrepancies discovered by the underwriter could seriously impact your approval chances. Transparency is key.

By following these tips, you’ll be better prepared to navigate the small business loan underwriting process. Remember to maintain accurate records, demonstrate liquidity, and present consistent revenue streams. These steps will increase your likelihood of success and help you secure the financing your business needs.

The Underwriting Small Business Loan Process Steps

The process of underwriting small business loans can vary in duration, depending on the type of lender you choose. For instance, online lenders are generally known for quicker processing than traditional banks. It’s crucial to communicate with your lender and inquire about the expected timeframe, allowing you to stay prepared and follow the tips mentioned earlier to increase your approval chances throughout the underwriting process.

The underwriting small business loans process typically involves three distinct steps:

  1. Application

This initial step involves submitting your loan application and all the required documentation, such as financial statements, credit reports, business plans, and collateral details.

Ensuring your application is accurate, complete, and supported by relevant data is essential. The lender will use this information to evaluate your creditworthiness and ability to repay the loan.

  1. Review

During this phase, the lender’s underwriter will examine your application and the accompanying documents meticulously. They will verify the accuracy of the data provided, assess your credit history, analyze your business’s financial health, and evaluate your ability to meet loan obligations.

The underwriter aims to determine the level of risk associated with granting you the loan and assess whether you meet their lending criteria.

  1. Approval

After a thorough review, the underwriter will decide regarding the loan application. It will likely receive approval if your application meets the lender’s requirements and demonstrates satisfactory creditworthiness and repayment capacity.

On the other hand, if the underwriter identifies significant risks or issues in your application, it may lead to a rejection or require modifications to the loan terms.

It’s crucial to remember that the underwriting small business loans process plays a crucial role in determining your loan’s outcome. By providing accurate and verifiable information, maintaining a strong credit history, and demonstrating the ability to repay the loan, you enhance your chances of receiving approval for your small business loan.

Additionally, staying proactive and communicating with your lender throughout the process can help you navigate potential challenges and ensure a smoother and more efficient underwriting small business loans experience.

Before Submitting Your Loan Application

Take the opportunity to consult a reliable financial advisor and address the underwriting small business loans questions mentioned earlier. Ensure no potential deal-breakers are hidden within your application before engaging with a lender or submitting it to an underwriter.

While having the answers and adequate preparation might not guarantee approval for the small business loan you seek, it will undoubtedly enhance your chances and enable you to identify the loan that best suits your business needs.

Navigate Your Underwriting Small Business Loans Process and Secure Your Ideal Loan with GoKapital!

At GoKapital, we understand that obtaining the right financing for your business or real estate ventures can be challenging. Each lender has its specific criteria, making it crucial to explore multiple options before settling on a deal. If you’ve faced rejection for a business loan or wish to explore different possibilities, we encourage you to contact GoKapital.

As a leading private lender, GoKapital is dedicated to helping small businesses thrive by offering tailored financing solutions. Whether you require a business loan to expand your operations or real estate financing for property investments, we are committed to presenting you with the best available options in the market.

Our team of experienced financial experts is well-versed in the underwriting process and will guide you through every step. If you find the underwriting process overwhelming, consider seeking advice from financial advisors or loan specialists. They can provide valuable insights and help you present your application in the best possible light.

GoKapital is dedicated to assisting you throughout the loan application process, from gathering the necessary paperwork to presenting a compelling case to our underwriters. Our mission is to help your business thrive, and we are committed to finding the financing solution that best suits your needs. Reach out to us today, and let’s take the next step together on your path to success.

Ready to take your business to the next level? Contact GoKapital today and secure the financing you need to grow and succeed. Our team of financial experts is here to guide you through the underwriting process and find the best loan options tailored to your specific needs.

Don’t wait any longer – seize this opportunity and make your business dreams a reality. Get started now by visiting our website or giving us a call.

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Guides and Resources Small Business Finance

Here’s What the New SBA Loan Rules Mean for Your Small Business

Here’s What the New SBA Loan Rules Mean for Your Small Business

The U.S. Small Business Administration is anxious about small businesses in underserved markets facing difficulties in getting loans from the SBA.

On May 11 and 12, the SBA made changes to their programs to make it easier for lenders to participate, allow nonprofit lenders through Community Advantage to provide more opportunities, and simplify the documentation process for evaluating loans.

According to Isabella Casillas Guzman, the U.S. Small Business Administrator, these updates will modernize and expand the SBA’s lending programs. This will benefit communities that have been historically overlooked, giving them better access to funding for creating jobs and growing the economy.

The new rules aim to make it easier for minority-, veteran-, and women-owned businesses to obtain government-backed small business loans.

What Are the New Changes in the SBA Rule?

The U.S. Small Business Administration (SBA) has implemented new rule changes that will have significant impacts on their loan programs. These changes were finalized in April and are set to be effective in May. Let’s take a closer look at these major changes:

  • Affiliations and Lending Criteria

The first rule change focuses on SBA affiliations and lending conditions. It was issued in the Federal Register on April 10, 2023. This change aims to revise the regulations related to SBA affiliations and establish new criteria for evaluating loan applications.

  • Moratorium on Licensing New Small Business Lending Companies

The second rule change, published in the Federal Register on April 12, 2023, addresses the moratorium on licensing new Small Business Lending Companies (SBLCs). The SBA has made changes to this moratorium, which will impact the licensing process for SBLCs.

One significant change resulting from these rule revisions is the expansion of non-bank lenders eligible to apply for an SBLC license. Previously, only a limited number of non-depository institutions, such as banks and credit unions, could offer SBA 7(a) loans.

SBLCs were required to purchase one of the 14 existing licenses from another SBLC to participate in the program. However, the SBA has decided to lift this cap and allow new financial companies, including fintech, to apply for an SBLC license.

While the SBA plans to initially add only three new SBLCs, the removal of the license cap is expected to increase access to affordable loans. The SBA estimates that a newly licensed SBLC could issue approximately 425 new loans over the next four years. This change is particularly beneficial for small and underserved businesses, as it expands the pool of lenders and provides more opportunities to secure capital.

Fintech company Funding Circle has expressed support for these changes, as they believe it will help enhance access to capital for America’s underserved and smallest businesses. The SBA’s efforts to expand the number of SBLCs and include fintech are aimed at promoting economic growth and supporting the financing needs of diverse businesses across the country.

The Addition of Community Advantage Lenders

The U.S. Small Business Administration (SBA) is introducing a new category of lenders called Community Advantage lenders. This initiative aims to support nonprofits and mission-oriented lenders that may not meet the typical qualifications for SBA lending. Community Advantage lenders focus on providing assistance to underserved markets, including startups, businesses owned by veterans and women, as well as serving rural and low-income communities.

Currently, both for-profit and nonprofit Community Advantage lenders are involved in offering SBA loans to business owners in underserved markets. However, these lenders have been operating under the Community Advantage pilot program, which has a limited duration and is scheduled to conclude in 2024.

As part of the SBA’s efforts to establish a more permanent solution, lenders who are currently participating in the pilot program will transition into the new program. This transition will involve receiving a non-temporary license, allowing them to continue their operations without an expiration date.

While existing lenders in the pilot program can be either for-profit or nonprofit organizations, new applicants seeking to participate in the Community Advantage program must be nonprofits in order to qualify for the program.

By incorporating Community Advantage lenders into their programs, the SBA aims to expand access to capital and financial resources for small businesses operating in underserved markets. This change provides a dedicated platform for nonprofits and mission-oriented lenders to continue serving these communities and supporting the growth and success of startups, veteran- and women-owned businesses, as well as those located in rural and low-income areas.

To Qualify For 7(A) And 504 Loans, Lenders Will Now Take into Account a Reduced Number of Factors

The SBA has introduced changes to the qualification criteria for 7(a) and 504 loans, aiming to streamline the process and provide more objective standards for small businesses. Previously, businesses seeking an SBA loan had to demonstrate creditworthiness and the ability to repay the loan by meeting nine different factors.

Under the previous criteria, lenders assessed factors such as the business’s ability to make loan repayments, experience, character and credit history, past and future financial statements,collateral, invested equity, the potential for success, and overall business strength. However, the new rule has simplified the credit criteria by focusing on three key factors.

The revised criteria now place emphasis on the following:

  • Credit Score or Credit History

Lenders will consider the credit score or credit history of the business owner. This factor provides an objective measure of the borrower’s creditworthiness and financial responsibility.

  • Earnings or Cash Flow of the Business

The new rule takes into account the earnings or cash flow generated by the business. This factor allows lenders to assess the business’s ability to generate sufficient income to repay the loan.

  • Collateral

Collateral continues to be a significant consideration in the loan qualification process. Lenders will evaluate the assets that can be used as collateral to secure the loan.

By reducing the number of factors considered for loan qualification, the new criteria offer a more streamlined and objective approach. Small businesses now have a better chance of qualifying for an SBA loan based on these specific and measurable factors rather than relying on subjective elements like character, which can vary in interpretation among different lenders.

This change is expected to benefit a larger number of small businesses by providing a clearer path to securing an SBA loan. By focusing on credit history, business earnings, and collateral, the SBA aims to simplify the loan application process and promote greater access to financing for small businesses across various industries.

Why The SBA Loan Rules Are Changing?

The SBA rules are changing to address the issue of limited access to capital for small businesses in underserved communities. Currently, these businesses often face credit denials due to their existing qualifications. The new rules aim to tackle this problem by implementing the following measures:

  1. Expanding the number of lenders

The SBA intends to broaden the pool of lenders that can process SBA loans. By allowing more financial institutions to participate, including non-bank lenders such as fintech companies, the SBA aims to increase the availability of capital for small businesses in underserved communities.

  1. Less restrictive credit criteria

The rule changes aim to help more businesses qualify for SBA loans by revising the credit criteria. The SBA seeks to establish criteria that are more inclusive and accommodating, enabling a wider range of businesses to meet the requirements and access the funding they need.

  1. Streamlining loan applications

The SBA recognizes the need for a streamlined loan application process that benefits both lenders and small businesses. By simplifying and improving the application procedures, the SBA aims to enhance efficiency and make it easier for lenders to process loan requests while providing a smoother experience for small businesses seeking funding.

These rule changes are necessary because the current SBA loan statistics, as derived from the SBA 7(a) and 504 summary report, highlight disparities and inadequacies in the existing system:

  • Men consistently receive over 70% of SBA 7(a) and 504 loans each year, indicating a gender imbalance in access to SBA funding.
  • Veterans receive less than 4% of SBA 7(a) loans and less than 3% of 504 loans annually, indicating a significant gap in providing support to veteran-owned businesses.
  • Minority small business owners consistently lag behind their white counterparts, with white small business owners typically receiving over 40% of both 7(a) and 504 loans. This disparity reveals an urgent need to address the unequal distribution of funding opportunities based on race.

To address these disparities and create a more equitable lending landscape, the SBA recognizes the importance of updating its rules and programs. The goal is to ensure that small businesses in underserved communities, regardless of their gender, veteran status, or ethnicity, have equal access to capital, allowing them to thrive and contribute to economic growth.

When Do the New SBA Rule Changes Take Effect?

Effective May 11 and 12, 2023, the new SBA rule changes have brought about significant updates and modifications to various aspects of the SBA loan programs. Let’s explore these changes in more detail:

May 11, 2023:

On this date, the SBA implemented revisions to the lending criteria and regulations governing SBA 7(a) and 504 loans. The changes encompassed several important areas, including:

  1. Factors considered – The SBA updated the factors taken into account when evaluating loan applications. This includes criteria related to creditworthiness, financial stability, and other relevant considerations.
  1. Loan conditions – The SBA introduced updates to the conditions under which loans are issued, such as interest rates, repayment terms, and collateral requirements. These changes aim to align the loan conditions with the evolving needs and challenges faced by small businesses.
  1. Reconsiderations – The SBA modified the guidelines for reconsidering loan applications that were initially declined. The new rules provide additional opportunities for applicants to present additional information or address any discrepancies that may have contributed to the initial rejection.
  1. Affiliation standards – The SBA revised the affiliation standards, which determine whether a small business is considered independent or affiliated with a larger entity. This revision clarifies and streamlines the rules for businesses seeking SBA loan assistance.
  1. Using funds for partial changes in ownership – The SBA updated the guidelines regarding the utilization of loan funds for partial changes in ownership of small businesses. These changes aim to facilitate transactions involving changes in ownership structures, allowing businesses to access capital for such purposes.

May 12, 2023:

On this date, the SBA enacted significant changes related to Small Business Lending Company (SBLC) licenses and loan programs. These changes include:

  1. Lifting the SBLC license moratorium – The SBA removed the moratorium that previously restricted the issuance of new licenses to Small Business Lending Companies (SBLCs). This change allows new non-bank institutions to apply for an SBLC license, broadening the range of financial entities capable of providing SBA loan products.
  1. Community Advantage SBLC – To further expand lending opportunities, the SBA introduced the Community Advantage SBLC license. This license is specifically designed to enable nonprofit organizations and mission-oriented financial institutions to become licensed SBLCs. It empowers these entities to offer SBA loans and provide support to underserved markets, including startups and businesses owned by veterans and women, as well as those operating in rural and low-income communities.
  1. Removal of Loan Authorization document – The SBA eliminated the requirement for a Loan Authorization document in the 7(a) and 504 loan programs. This change simplifies the loan process by eliminating the need for borrowers to obtain and submit this document during the application and disbursement stages.

By implementing these changes, the SBA aims to enhance access to capital, promote inclusivity, and streamline the loan application process for small businesses seeking financial support. These updates reflect the SBA’s commitment to adapt and improve its programs to better serve the needs of the entrepreneurial community and foster economic growth.

Final Thoughts

In summary, the SBA is making big changes to its rules for Small Business Lending Company licenses. They will now approve borrowers based on new criteria and make the loan authorization process simpler, taking advantage of lenders’ expertise and current technology.

The SBA also wants to help businesses that have been overlooked by creating new Community Advantage lenders. Nonprofits and mission-based lenders can now apply for a permanent license to support these underserved businesses.

If you want to know more about getting an SBA loan, you can connect with an SBA lender who can answer your questions. Just remember, you’ll need to show that you’ve tried other business loan options before qualifying for an SBA loan.

Looking for business loans or real estate financing? Look no further! GoKapital is your trusted private lender. Whether you need funding for your business or investment properties, we’re here to help. Contact GoKapital today to discuss your financing needs and find the perfect solution for your goals. Don’t miss out on this opportunity – reach out to us now!

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Small Business Finance Small Business Trends

Revolutionize Your Sales: The Advantages of a POS System for Your Business

The Advantages of a POS System for Your Business

Are you looking for ways to optimize sales in your business and make the process smoother? Have you heard about point-of-sale (POS) systems, but don’t know what they are or how they can benefit your company? The great news is that POS systems allow businesses of all sizes to improve their customer service, increase efficiency, organize operations better, track inventory accurately and ultimately grow profits. In this blog post, we will explore the advantages of incorporating a POS system into your workflow and provide guidance on how to get started.

  1. What is a POS system 
  2. Benefits of using a POS system 
  3. How to get started with a POS system 
  4. Benefits of integrating loyalty programs with the POS system

1. What is a POS system 

Have you ever wondered how a store efficiently keeps track of all its sales and inventory? That’s where a POS system comes in. POS stands for Point of Sale, and it’s a system that manages a store’s sales operations. With a POS system, a store can track and record each sale, update inventory in real time, and generate reports that help with decision-making. It consists of both hardware and software components that work together to make a sale, including a monitor, scanner, cash drawer, and receipt printer. Overall, a POS system helps businesses streamline their sales operations and achieve greater efficiency.

2. Benefits of using a POS system 

In today’s fast-paced world, efficiency is key to running a successful business. One way to enhance efficiency is through the use of a Point of Sale (POS) system. A POS system is a computerized system that helps businesses efficiently manage their sales transactions, inventory, and customer data. With a POS system, businesses can easily track inventory levels, generate sales reports, and analyze data to make informed business decisions. Additionally, a POS system streamlines the checkout process, reducing long lines and customer wait times. Not only does this improve overall customer satisfaction, but it also increases sales revenue. By implementing a POS system, businesses can benefit from increased efficiency, improved customer experience, and ultimately, increased profitability.

3. How to get started with a POS system 

Are you tired of manually tracking your sales and inventory? It may be time to consider implementing a POS system into your business.

The first step in getting started is to research different POS systems and find one that fits your specific business needs. From there, you’ll need to set up the hardware and software components, including a point-of-sale terminal, barcode scanner, receipt printer, and inventory management system. Next, you’ll need to input your products into the system and learn how to use it effectively.

Don’t be afraid to ask for help or training from the POS provider, as they want to ensure you’re getting the most out of their product. With a little effort and investment, a POS system can transform the way you do business and increase your bottom line.

4. Benefits of integrating loyalty programs with the POS system

Customers are the backbone of any business, and it’s crucial to keep them engaged and loyal. One effective way of achieving this is by integrating loyalty programs with the POS system.

This integration comes with a ton of benefits that businesses can leverage. First, it’s easier to track customer purchases, which helps in tailoring promotional offers and rewards that match their needs. Second, it’s more cost-effective to retain customers than to acquire new ones; loyalty programs encourage repeat business and increase customer lifetime value.

Third, a POS-supported loyalty program improves the overall customer experience by making it seamless and convenient for customers to redeem their rewards, making them feel valued and appreciated. In conclusion, integrating loyalty programs with POS systems is a smart move for businesses seeking a competitive edge and long-term sustainability.

To conclude 

To summarize, a Point of Sale (POS) system can help revolutionize your sales. POS systems provide several advantages for businesses such as the ability to quickly process transactions, manage replenishment and inventory levels more accurately, and help reduce the amount of manual labor needed for tracking sales and customers. Additionally, integrating loyalty programs with a POS system is an effective way to increase customer visitation frequency and motivate shoppers to spend more on products or services. If you’re looking for a solution to modernize your business operations, then investing in a POS system could be a great option to consider. Doing so will ultimately help you save time, money, and resources in the long run.

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Small Business Finance

How to Achieve Important Long-Term Financial Goals

How to Achieve Important Long-Term Financial Goals

Mapping out a path to achieve long-term financial goals is crucial for securing a stable future. Whether buying a dream home, retiring comfortably, or starting a business, these aspirations require careful planning, dedication, and strategic decision-making.

In this article, we delve into the strategies and insights needed to successfully navigate the journey towards important long-term financial goals. Discover how to unlock your potential, overcome challenges, and embark on a transformative financial journey.

How to Achieve Important Long-Term Financial Goals

Achieving important long-term financial goals requires careful planning and strategic actions. Here are some simple steps to help you on your journey:

  • Define your goals

Identify what you want to achieve in the long run, such as buying a house, retiring comfortably, or starting a business. Having a specific target will guide your financial decisions.

  • Save and invest wisely

Practice disciplined saving by budgeting and automating your savings. Look for investment opportunities that align with your risk tolerance to grow your wealth over time.

  • Create a financial plan

Develop a comprehensive plan by assessing your financial situation and forecasting future needs. Identify potential obstacles and adjust your plan accordingly.

  • Overcome challenges

Be prepared for obstacles, like managing debt or handling unexpected emergencies. Stay resilient and adapt to changes while staying focused on your goals.

  • Seek professional advice

Consider working with a financial advisor who can provide personalized advice and expertise tailored to your needs. They can accelerate your progress and help you make informed decisions.

  • Stay motivated

Celebrate milestones, visualize success, and surround yourself with a supportive community to maintain your motivation throughout the journey.

Following these steps and staying committed can turn your long-term financial goals into achievable realities, bringing you closer to a stable and fulfilling future.

Tips to Achieve Important Long-Term Financial Goals

Want to know more tips on how you can accomplish your long-term financial goals? Keep reading below:

  1. Discover Your Motivations

People struggle to achieve their long-term goals because they haven’t truly discovered their motivations. It’s not enough to simply know that a goal is important; you need to understand why it matters to you personally.

Let’s take the example of paying off debt. Many financial advisors stress its importance, but without a clear motivation, it’s easy to lose steam and give up before reaching your goal. If you’re only paying off debt for the sake of it, you’ll lack the necessary drive to see it through.

Instead, focus on finding motivations that resonate with you. Consider some common reasons why people want to pay off debt:

  • Avoiding interest payments on purchases
  • Having more money for vacations
  • Investing in a comfortable retirement
  • Eliminating the stress of bills and financial obligations
  • Reducing overall stress in life
  • Allocating more time to spend with family instead of managing debt

These are just a few examples of motivations others have. Now, you need to identify your motivations.

Assign a specific motivation to each of your long-term goals. Without this personal connection, you’ll simply be pursuing goals for the sake of achievement, which lacks true motivation. By understanding and embracing your motivations, you’ll be more driven to stay on track and accomplish your long-term goals.

  1. Properly Prioritize Your Long-Term Goals for Financial Success

When it comes to long-term financial goals, it’s crucial to prioritize them effectively. Let’s break it down into simple steps:

  • Build Your Emergency Fund – Think of your emergency fund as the foundation of your financial future. It provides a safety net for unexpected expenses like car repairs or medical bills. Start saving money that is easily accessible to handle these unexpected situations and reduce stress.
  • Save for Other Long-Term Goals – Once you have your emergency fund, cleared your debt, and saved for retirement, you can allocate resources towards other long-term goals. This might include saving for your children’s education, purchasing a new vehicle, home renovations, or other important aspirations.

By prioritizing your long-term goals in this order, you create a strong financial foundation, reduce the risk of financial hardships, and work towards a secure future. Proper planning and prioritization are key to ensuring financial well-being, even during challenging times.

  1. Allocate Specific Days for Long-Term Goals: Enhance Your Productivity and Focus

One valuable tip I learned from Strategic Coach is dedicating specific days of the week to particular goals. This approach has greatly benefited my life, and I believe it can do the same for you.

Here’s a simple example: Choose a day of the week to focus on managing your finances and brainstorming ways to improve your financial future. It could be a day when you have some free time, perhaps a day off from work.

Now, you might be thinking, “I’m already overwhelmed with my commitments, how can I find a whole day for this?” That’s a valid concern.

But here’s the beauty of it: You don’t have to limit this day to finances alone. You can also incorporate other long-term goals, such as your health, family, and other areas of responsibility. Consider this dedicated day (or days) as an opportunity for self-improvement and enhancing different aspects of your life. Can’t you make time for that?

By setting aside specific days to focus on your long-term goals, you create dedicated time slots that allow you to prioritize and make progress. It’s a way to streamline your efforts and ensure that you consistently invest in your future success. So, go ahead and designate specific days for your goals—watch how it brings clarity, productivity, and fulfillment to your journey.

  1. Keep Your Long-Term Goals Visible: Don’t Let Them Fade Away

Writing down your long-term financial goals is a great start, but it’s not enough. You need to ensure that your goals remain visible and easily accessible.

One effective method is to write them on a whiteboard or any other prominent place where you’ll see them daily. However, this approach might not work for everyone.

The key is to find a way to consistently remind yourself of your long-term goals and keep them in sight alongside your short-term goals. If you only have your short-term and urgent goals in front of you, it’s easy to get caught up in those and lose sight of the bigger picture.

Don’t let your long-term goals get buried or forgotten. They are just as important as your short-term goals. Find a way that works for you to keep them visible and remind yourself of their significance. It could be through digital reminders, sticky notes, or any method that resonates with you.

  1. Include Your Long-Term Goals in Your To-Do List

Regarding long-term financial goals, they are more like projects than simple tasks.

For instance, if your goal is to pay off debt, you likely have multiple debts, such as credit cards, a vehicle loan, or a student loan.

Think of “pay off debt” as the project and each debt as a task. For example, “pay off Visa #1” becomes a specific task within the larger project.

If you don’t write down your projects and tasks within a task management system, you’re less likely to achieve your long-term goals. There’s something powerful about seeing them documented, whether on paper or a digital screen. Writing them down creates a sense of commitment.

Give it a try. Write down your long-term financial goals and make it a habit to review them regularly. By incorporating them into your to-do list, you’ll stay focused, accountable and increase the likelihood of accomplishing your long-term goals.

Examples of Long-Term Goals

Long-term financial goals vary depending on individual values, dreams, and timelines. Here are some examples of long-term financial goals presented in the SMART framework:

Save for Retirement:

  • Specific: Save $1 million by age 65 for retirement.
  • Measurable: Save $500 per month in a retirement account.
  • Achievable: Save $500 per month based on current income and expenses.
  • Relevant: Aligns with personal values and aspirations for a secure retirement.
  • Time-bound: Goal to be achieved by age 65.

Pay off Debt:

  • Specific: Pay off $30,000 in credit card debt.
  • Measurable: Pay $500 per month towards credit card debt.
  • Achievable: Realistically pay $500 monthly based on the current financial situation.
  • Relevant: Aligns with personal values of financial freedom and reducing stress.
  • Time-bound: Aim to accomplish the goal within five years.

Invest in Education:

  • Specific: Save $50,000 for a child’s college education.
  • Measurable: Save $200 per month in a 529 college savings plan.
  • Achievable: Feasibly save $200 per month, considering current income and expenses.
  • Relevant: Reflects the value of investing in a child’s future education.
  • Time-bound: Goal to be achieved in 18 years.

Buy a House:

  • Specific: Save $100,000 for a down payment on a house.
  • Measurable: Save $1,000 per month in a high-yield savings account.
  • Achievable: Realistically save $1,000 per month based on current financial circumstances.
  • Relevant: Aligns with the aspiration of homeownership and long-term stability.
  • Time-bound: Aim to accomplish the goal within five years.

Start a Business:

  • Specific: Launch a profitable business in the next five years.
  • Measurable: Develop a business plan and secure funding within the next 12 months.
  • Achievable: Feasibly develop a business plan and secure funding within the next year.
  • Relevant: Reflects the ambition and aspiration of entrepreneurship.
  • Time-bound: Goal to launch the business within the next five years.

These examples illustrate various long-term financial goals tailored to personal values and aspirations. Setting SMART goals helps provide clarity, direction, and a clear path to long-term financial success.

FAQs

What is the most common long-term financial goal?

One of the most common long-term financial goals is saving for retirement. Many individuals strive to build a sufficient nest egg to sustain their lifestyle and cover expenses during their retirement years. This goal involves consistently saving and investing over a prolonged period to ensure financial security in retirement.

What are some examples of financial goals?

Financial goals can vary based on individual circumstances and aspirations. Here are a few examples of financial goals:

  • Paying off debt – This includes clearing credit card debt, student loans, or mortgage balances.
  • Saving for emergencies – Building an emergency fund to cover unexpected expenses or financial setbacks.
  • Buying a house – Accumulating funds for a down payment and mortgage payments to purchase a home.
  • Investing for wealth accumulation – Growing investments in stocks, bonds, or real estate to build long-term wealth.
  • Saving for education – Setting aside funds for personal or children’s education expenses.
  • Starting a business: Saving capital and securing funding to launch and sustain a new venture.
  • Estate planning – Creating a will or trust to manage and distribute assets after passing away.

What is the long-term goal of financial management?

The long-term goal of financial management is to establish and maintain a solid financial foundation, ensure financial security, and achieve financial objectives over an extended period. It involves strategic planning, budgeting, investing, risk management, and making sound financial decisions to maximize wealth, minimize debt, and optimize resources for long-term growth and stability.

How do you develop long-term financial goals?

To develop long-term financial goals, consider the following steps:

  • Contemplate on your values and goals – Identify what matters to you and align your financial goals accordingly.
  • Set specific and measurable goals – Make your goals clear, quantifiable, and time-bound using the SMART framework (Specific, Measurable, Achievable, Relevant, Time-bound).
  • Assess your current financial situation – Understand your income, expenses, debts, assets, and financial obligations to determine what is realistic and feasible for you.
  • Prioritize your goals – Determine which goals are most important and require long-term planning. Consider both short-term and long-term goals to strike a balance.
  • Break down goals into actionable steps – Divide your long-term goals into smaller, manageable tasks or milestones. This will make them less overwhelming and easier to track progress.
  • Create a financial plan – Develop a comprehensive plan that outlines the strategies, timelines, and resources needed to achieve your long-term goals. Consider seeking professional advice if necessary.
  • Review and adjust – Revisit your goals periodically to evaluate progress, make necessary adjustments, and stay on track. Life circumstances and priorities may change, requiring adjustments to your financial goals.

Final Thoughts

Pick at least one strategy from the list below and commit to implementing it over the next year. Once the year is over, share your progress with me. I encourage you to wholeheartedly embrace these strategies to increase your chances of achieving success.

Why? Because I genuinely want you to experience the satisfaction of accomplishing your goals. Let’s get started on your path to success!

Looking for a good lending agency you can trust? Look no further than Go Kapital. Contact us today to get started.

 

Categories
Small Business Finance

Best Medical Practice Financing for Fresh Graduate

Medical Practice Financing for Fresh Graduate Doctors

Becoming a doctor is a dream for many, but the journey from medical school to successful medical practice can be challenging.

For fresh graduate doctors, financing their medical practice is one of the biggest obstacles they face. Setting up a practice can be daunting, with expenses ranging from equipment and rent to staffing and marketing.

In this day and age, it’s essential to have a solid financial plan in place to ensure success. So, if you’re a fresh graduate doctor looking to start your practice, you’ve come to the right place.

Let’s dive into medical practice financing and explore tips and strategies for getting your business.

An Overview of Medical Practice Loans

Medical practice loans enable doctors and medical professionals to establish, grow, or expand their medical practices. These loans are specifically designed for the healthcare industry, and they can help medical practitioners cover a wide range of expenses associated with starting, running, or expanding their practices.

Here’s a closer look at some of the key features of medical practice loans:

  •  Loan Types

Medical practice loans come in several forms, including traditional bank loans, SBA loans, and alternative financing options. Each type of loan has unique advantages and disadvantages, so it’s essential to research and choose the loan that best fits your specific needs and financial situation.

  • Loan Amounts

Medical practice loans can range from a few thousand to several million dollars, depending on the lender and the borrower’s financial history. In general, lenders will look at borrowers’ credit scores, income, and other financial factors to determine how much they’re willing to lend.

  • Loan Terms

Medical practice loans typically have a repayment term of 5-10 years, although this can vary depending on the lender and the loan amount. Some lenders may offer shorter repayment terms for smaller loans, while a few may offer longer repayment terms for larger loans.

  • Interest Rates

Interest rates for medical practice loans can also vary widely depending on the lender and the borrower’s financial history. Generally, borrowers with good credit scores and stable incomes are more likely to qualify for lower interest rates.

  • Use of Funds

Medical practice loans can be used for various purposes, including purchasing equipment, leasing or buying office space, hiring staff, marketing, and working capital.

Types of Medical Practice Loans

Medical practice loans are financing designed to help healthcare providers acquire the necessary funds to run their practices.

These loans come in different types and can finance various needs, including buying equipment, expanding the business, hiring staff, or refinancing existing debt. Here are six common types of medical practice loans:

  1. SBA 7(a) Loans

SBA 7(a) loans are government-guaranteed loans that provide long-term, low-interest financing to small businesses, including medical practices.

These loans can be used to buy equipment, real estate, and inventory or to refinance existing debt. The loan amount ranges from $50,000 to $5 million, and the repayment term is up to 25 years.

Pros:

  • Low-interest rates: SBA 7(a) loans typically have lower interest rates than other loans, making them more affordable for small businesses.
  • Longer repayment terms: The repayment terms for SBA 7(a) loans can be as long as 25 years, giving borrowers more time to pay back the loan.
  • Lower down payment requirements: SBA 7(a) loans need a lower down payment than other loans, making them more available to small businesses with limited capital.
  • Flexible use of funds: SBA 7(a) loans can be used for various purposes, including working capital, equipment purchases, and real estate acquisition.

Cons:

  • Lengthy application process: The application process for an SBA 7(a) loan can be time-consuming, with a lot of paperwork and documentation required.
  • Collateral requirements: SBA 7(a) loans often require collateral, which can be difficult for small businesses to provide.
  • Strict eligibility requirements: To qualify for an SBA 7(a) loan, businesses must meet strict eligibility requirements, which can be challenging for some small businesses.
  • Limited loan amounts: SBA 7(a) loans have a maximum loan amount of $5 million, which may not be enough for some businesses.

Traditional bank loans are another option for medical practice financing. Banks and other financial institutions typically offer these loans and require collateral, a good credit score, and a strong business plan.

The interest rates and repayment terms vary depending on the lender and the borrower’s creditworthiness.

Pros:

  • Lower interest rates: Traditional bank loans generally offer lower interest rates than other loans, such as credit cards or payday loans. This can make them an attractive option for borrowers looking to save money on interest charges.
  • Fixed repayment schedule: With a traditional bank loan, borrowers are given a fixed repayment schedule, which means they know exactly how much they need to pay and when.
  • Established institutions: Banks are established institutions with a long history of lending money, which can give borrowers peace of mind that they are working with a reputable lender.

Cons:

  • Strict eligibility requirements: Banks often have strict eligibility requirements, making it difficult for some borrowers to qualify for a loan.
  • Lengthy approval process: The approval process for a traditional bank loan can be lengthy and time-consuming.
  • Collateral requirements: Banks may require borrowers to put up collateral to secure the loan, which can disadvantage those with no assets to pledge.

Term loans provide a lump sum of money upfront and require fixed monthly payments over a specific period, usually one to ten years.

These loans can be used for various purposes, such as purchasing equipment or expanding the business. The interest rates and repayment terms vary depending on the lender and the borrower’s creditworthiness.

Pros:

  • Predictable payments: Term loans have fixed repayment schedules, so borrowers know how much they must pay each month.
  • Lower interest rates: Term loans typically have lower interest rates than other types of financing, such as credit cards or lines of credit. This can save borrowers money over the life of the loan.
  • Access to large amounts of capital: Term loans can provide businesses with large amounts of capital upfront, which can be used to fund major projects or investments.

Cons:

  • Collateral may be required: In some cases, lenders may require borrowers to provide collateral to secure the loan. This can be a significant risk for businesses, as they could lose valuable assets if they cannot repay the loan.
  • Longer repayment terms: While longer repayment terms can be an advantage, they can also be a disadvantage. Businesses may end up paying more in interest over the life of the loan and may be unable to take advantage of new opportunities due to their debt obligations.
  • Charges: Lenders may charge fees for processing or prepaying the loan. These fees can add up and increase the cost of borrowing.

Short-Term Loans

Short-term loans provide a lump sum of money upfront and require repayment within a short period, usually six months to two years.

These loans are ideal for healthcare providers who need quick access to capital for emergencies, payroll, or unexpected expenses. The interest rates and repayment terms vary depending on the lender and the borrower’s creditworthiness.

Pros:

  • Quick access to funds: Short-term loans usually have a quick approval process, allowing you to access funds quickly to start your medical practice.
  • Easier to qualify for As a fresh graduate doctor, you may not have a long credit history or established practice, making it difficult to qualify for traditional loans. Short-term loans typically have less stringent requirements, making it easier for you to qualify.
  • Flexible repayment terms: Short-term loans often offer flexible repayment terms, allowing you to repay the loan over a shorter period. This can be helpful if you want to pay off the loan quickly and avoid accumulating interest over a longer term.

Cons:

  • High-interest rates: Short-term loans often come with higher interest rates than traditional loans, making them more expensive in the long run.
  • Limited borrowing capacity: Short-term loans typically have a lower borrowing capacity than traditional loans, limiting the amount of funds you can access.
  • Short repayment: While a shorter repayment term can be a pro, it can also be a con if you cannot repay the loan within the required timeframe. Missing a payment or defaulting on the loan can negatively affect your credit score.

Business Lines of Credit

Business lines of credit are revolving credit that allows healthcare providers to borrow funds up to a predetermined limit.

These loans are ideal for medical practices that have ongoing expenses or need flexible financing options. The interest rates and repayment terms vary depending on the lender and the borrower’s creditworthiness.

Pros:

  • Flexibility: A business line of credit allows the borrower to access funds up to a prearranged credit limit as needed. This means the borrower only pays interest on the amount borrowed, not the entire credit limit. This can benefit medical practices with fluctuating cash flow or unexpected expenses.
  • Convenience: Once approved, a business line of credit allows the borrower to quickly access funds without needing additional loan applications or approvals.
  • Helps Build Credit: Timely payments and responsible use of a business line of credit can help establish and improve a practice’s credit score, which can benefit future financing needs.

Cons:

  • Higher Interest Rates: Business lines of credit generally have higher interest rates than traditional business loans. This can increase the cost of borrowing and impact a practice’s profitability.
  • Risk of Overborrowing: Because a business line of credit allows the borrower to access funds as needed, it can be easy to overborrow. This can lead to higher interest payments and potentially put the practice at risk of defaulting on the loan.
  • Short-term Financing: Business lines of credit are typically short-term financing options, with terms ranging from a few months to a few years. This may not be ideal for medical practices that require longer-term financing.

How to Choose the Best Medical Practice Loan for Your Business?

Choosing the best medical practice loan for your business is a critical decision that requires careful consideration.

Here are some steps to help you choose the right loan for your medical practice:

 Determine Your Financing Needs

Before you start looking for loans, assess your financing needs. Determine how much money you need and what you need it for. Are you looking to purchase new equipment or expand your practice?

Understanding your financing needs will help you select the right loan product that meets your requirements.

Evaluate Your Credit Score

Your credit score is crucial in determining your eligibility for a loan and the interest rate you’ll pay.

Check your credit score before applying for a loan and ensure that it is accurate and up-to-date. If you have a good credit score, you’ll have more options and may qualify for lower interest rates.

Compare Lenders

Once you have determined your financing needs and assess your credit score, research and compare lenders to find the best loan options.

Consider interest rates, repayment terms, fees, and customer service. Look for lenders that specialize in medical practice loans, as they may offer tailored loan products and have a better understanding of your industry.

Understand the Loan Terms

Before signing any loan agreement, ensure that you understand the loan terms and conditions. Review the interest rate, repayment schedule, fees, and penalties for late payments or early repayment. Ensure the loan terms align with your business goals and financial capacity.

Consider Collateral

Some loans require collateral, such as property or equipment, to secure the loan. You may need to explore unsecured loan options if you don’t have sufficient collateral.

Keep in mind that secured loans usually offer lower interest rates, but come with the risk of losing your collateral if you default on the loan.

Seek Professional Advice

If you’re unsure which loan product to choose, seek advice from a financial advisor or a healthcare financing specialist. They can guide the best loan options for your medical practice and help you navigate the application process.

Final Thoughts

In conclusion, financing medical practice can be critical for fresh graduate doctors looking to start or expand their own medical practice. There are several different types of financing options available, each with its unique advantages and disadvantages. It’s important for doctors to carefully consider their financial needs and options before selecting a financing option that aligns with their specific goals and objectives.

One financing option is GoKapital, a private lender offering business loans and real estate financing. With a commitment to providing personalized service and tailored financing solutions, GoKapital can work with fresh graduate doctors to develop a financing plan that meets their unique needs and supports the success of their medical practice.

Ultimately, by carefully evaluating their options and working with experienced lenders like GoKapital, fresh graduate doctors can secure the financing they need to establish and grow a successful medical practice that delivers high-quality care to their patients.