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What the SBA's New Guidelines Mean For Your Small Business

The U.S. Small Business Administration has changed the guidelines it uses to determine what a "small business" actually is. The new criteria now now allow an estimated 8,500 additional businesses to be eligible for the "small business" title, which comes along with certain federal assistances.  

According to a recent Wall Street Journal report, the criteria determining whether or not an organization is a "small business" hasn’t changed since 2008. The new formula varies greatly across industries. For instance, in some industries, a business with up to 1,500 employees may still be considered a small business – so even a family clothing store bringing in more than $38 million per year or a travel agency with $20.5 million per year can both still qualify as "small."

The change has been met with a certain level of criticism since these larger, small business often have an easier time accessing capital than true “Mom and Pops.” Only 39 percent of businesses with revenue under $5 million successfully obtained bank loans last year, according to the report. The new classifications may make competition for those loans even more intense than it was before.

Have you been impacted by the SBA’s new guidelines?

If so, let us know your experience in the comments section. 

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Business Financing Through Unconventional Methods

For those small business owners that think a small business loan is out of their reach – prepare to be inspired.

Jake Fitzsimmons, opened a hamburger bar in Colorado in 2010. He thought the odds of obtaining a loan were so low that he often asked himself, "why even bother [applying]?" However, because he had successfully opened two previous locations - neither of which required taking out a bank loan - he was able to make the case that he was an ideal candidate for a $500,000 loan, based on his demonstrated business acumen.

Along with the help of the East Colorado Small Business Development Center, he had four different banks - including the bank he does his deposits – bid on his request for a $500,000 loan. Fitzsimmons was able to find the lowest rate, offered to him because of his past success has a small business owner. 

Jake’s story is an interesting one, and suggests finding financing sometimes requires both a little creativity and a strong track record.

Keri Gohman, executive vice president and head of small-business banking for Capital One, recently spoke about the state of small business loans right now. She noted that "it's actually a really great time to access small-business capital," partially because banks and non-bank lenders alike are offering attractive, competitive loan rates. She concluded her interview with some notes that will surely brighten small business owner's days: she promises that lending rates are lower than ever, and that it's simple for any small business owner to shop around and find a competitive loan rate. 

Have you tried a unique approach to accessing capital like Jake did? If so, let us know! 

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3 Questions About the Affordable Care Act You Need Answered

Small business owners always have to deal with changing regulations, from their state and from their country - but few changes have ever been as confusing as those put into place by the Affordable Care Act. The ACA has set a deadline by which almost all business owners - even the small firms - will be required by law to provide health insurance coverage to their employees.

The ACA also allows for a new way of obtaining health care, via government-subsidized state-run "exchanges." All these changes are leading to a lot of questions among business owners, and we've got the answers to a few of those questions below. 

Q: Which businesses qualify for credits for government-subsidized health care?
Answer: If you have fewer than 25 full-time employees, and they make an average of less than $50,000 per year, then you may be qualified to obtain significant savings in regards to health care. If your business fits those qualifications, and also pays at least 50 percent of your full-time employees' premium costs, then you can obtain a tax credit worth up to half of your entire investment in your employee's premiums.
If your business is of that size, you won't face any repercussions if you choose not to provide health care - but as you can see, there are potentially major tax credits in your future if you choose to.

Q: Which businesses are required to provide health care coverage?
A: Technically, no businesses are completely required to offer health care coverage. However - starting in 2015 - large businesses who choose not to provide their employees with health care may have to make penalty payments to the government. If you have fewer than 50 full-time employees, this doesn't concern you. If your business does have more than 50 employees, however, then you need to plan for the new provisions - or you'll need to pay a penalty. 

Q: What if my business employs more than 50 individuals?
A: If you employ more than 50 employees, then you're a "large business" in terms of the new health care law. That means you need to provide your employees with coverage, either via state-run marketplaces or private insurance providers. If you don't, then you'll need to pay the aforementioned penalty on a yearly basis, and you may potentially face other conflicts. 

Do you have other questions about the ACA? Let us know – our team is ready to answer your questions. 

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How the Gender Gap Affects Small Business Loan Approvals

If you're looking to get a small business loan, there are many factors that come into play. Your credit history, your business' cash flow and numerous other things will be looked at by lenders. However, there's another factor that seems to be coming into play: gender. According to recent reports, female small business owners are much less likely to get loans and government contracts than their male peers.

According to a recent CBS News report, summarizing findings from the Senate Small Business & Entrepreneurship Committee, female business owners account for less than 5 percent of all the capital lent to small companies. This comes despite the fact that women own 30 percent of small companies - six times as much as the share of funding they receive. Additionally, women receive only 7 percent of all capital funded by venture firms. 

Furthermore, small businesses owned by women only receive 16% all traditional small business loans – it was also found female applications are more likely to be rejected, or have more stringent terms, than men. 

Committee Chair Maria Cantwell, of Washington, also spoke about the issue in an interview with the Associated Press. She noted that "the numbers are jarring," and that female entrepreneurs need access to more capital so that they can have the same opportunity to succeed as do men who start their own business. Her statements hammer the issue home: the amount of women passed over for small business financing support is downright shocking. 

Thoughts from our female – or male – readers on the issue? We’re interested in any feedback about what small business owner’s opinion on the above is. 

 

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Preparing for Taxes, Year Round

Every year in April, small business owners scramble to pay all the taxes that their business owes. This can sometimes be a stressful process: you're scrambling in search of documents, digging through drawers in search of receipts, hiring accounting firms and much more to make sure you get every deduction owed to you.

What if you didn't have to deal with that stress? Well, you don't have to, if you work to prepare your business for tax season. Here's a few tips that'll help you get into the habit.

Keep all documents and receipts on site - and digitize, when possible
At the end of the tax year, you're going to miss out on some potential deductions - unless you have all the receipts related to expenses incurred on behalf of your business on-site and ready to go. So keep a well-organized drawer that includes not just all of your financial statements, but all of your receipts collected over the course of a given year. That way, you can ensure they'll be on hand when it comes to be tax time.

Provide employee benefits
Looking for new ways to earn deductions? Investigate which fringe benefits offered to your employees can lead to significant tax savings for your company via IRS documents, and you'll be sure to find some deductions you can take advantage of. 

Always perform projections
Don't just look at your financial statements at the end of the tax year - keep an eye on them through the whole calendar. If you see an increase in sales, for instance, then you're going to need to adjust the amount you have put away for tax payments, too. At the very least, take a look at your financial projections once every financial quarter - and you'll be well prepared for when tax season shows up.

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The 3 Fastest Growing Small Business Industries

Across the country, there are a number of industries that are beginning to bustle with activity as more small businesses get in on the action. 

And if you're looking for a tip on what these growing industries may be, then Inc. Magazine has you covered. The news outlet recently specified some of the fastest growing sectors of industry - and we've collected information on a few of them below. Check out this list to see if your industry made the cut, or to gather any ideas on where you could potentially take your business in the future. If you're interested in the full list, click over to Inc.'s website.

Green construction
The best way to be environmentally friendly is to plan to do so within the foundation of your business itself. So it should come as no surprise that Inc. is reporting that green construction - or rather, construction firms that can build environments well suited to low levels of energy consumption - are growing at rapid rates. 

Online baby products
Sales of baby apparel made online are expected to clear $6 billion in revenue, according to the news outlet. Retailers of baby products have been slow to adapt to online commerce, and that has left a big hole in this particular sector of business. As a result, sales of these products are climbing incredibly fast - and entrepreneurs are developing plans to jump into this industry even faster. 

Translation services
Everyone knows that businesses are going global - and that's leading to great demand in the translation sector. So if you, or anyone you have access to, has the ability to translate from one language to another, then you should be looking into small business financing options - you're already in line to dive into one of the world's fastest growing industries.

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You Can Trust Small Businesses - And A Study has Proven It!

When you're a small business owner, one of the most powerful tools in your arsenal is trust. Think about it: consumers have no idea who owns Wal-Mart, in fact, they probably don't know a single person who works at their local branch of the brand. Yet, they do know the individuals who run their local small businesses - they may even live on the same street as them!

That breeds an invaluable quality that business owners - both large and small - often spend decades trying to instill in their customer base: goodwill. When your customers know you, they trust you, and when they trust you, they get a positive charge from doing business with you. Everyone loves going to a restaurant where the server knows their name, and where the owner goes from table-to-table checking in. That's the benefit of consumer trust, and the goodwill that it breeds.

A recent report from Edelman proved this theory. The study found "family owned, small- and medium-sized businesses outperformed big businesses [in regards to consumer trust] in all regions ... private companies are seen as more entrepreneurial and innovative than public companies." 

So next time you’re dealing with a customer, remember to keep this in mind. You can stay in the back running numbers all day - but if you make yourself the face of your business, get to know your consumers, and earn their trust, it'll be paid off in the end. There's nothing that'll make your customers likely to buy your products more often like letting them get to know - and trust - you.

 

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The Friendliest States for Small Businesses

According to a recent study, some U.S. states are far more friendly and accommodating to small business owners than are others. 

The third annual Small Business Friendliness Survey, conducted by Thumbtack, aimed to determine the states and cities that offer regulatory standards and conditions that best accommodate small business owners. According to the small business owners polled, the "keys to a pro-growth environment are ease of compliance with tax and regulatory systems and helpful training programs," so the importance of what state they're based in - and what its regulations are - cannot possibly be overstated.

The Thumbtack study found that Utah, Idaho, Texas, Virginia and Louisiana are the highest rated states in the eyes of small business owners across the country. As for cities: Colorado Springs, Colorado, Boise, Idaho, and Houston, Texas took the top three spots. The most important regulatory factor, according to the survey, was the friendliness of professional licensing requirements, followed by the ease with which small business owners could file taxes. 

Conversely, California, Rhode Island, and Illinois were ranked the most unfriendly, with Connecticut and New Jersey following closely behind them.

Dane Stangler, vice president of Research and Policy at the Kauffman Foundation, concluded the report by noting that the "economic health of every city and state" is dependent on the performance of small businesses, and thus on the availability of entrepreneur-friendly regulations and standards.

Readers, weigh in below: what’s your experience been with the States listed above? For the full study, click here

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3 Foolproof Ways to Show Lenders you're a Low-Risk Borrower

Whether you’re looking at a traditional bank, or a nonbank lender like OnDeck, applying for a small business loan is all about illustrating your overall risk profile. A lender is looking to determine ways how likely you are to repay your loan – in full and on time. In order to make your application as attractive as possible, it’s best to follow these best tips:

1. Pay your bills on time
This is the most important part of building a strong financial reputation for your business. You have to pay your bills on time. You can even invest in applications, or auto-pay options, that pay your bills automatically to ensure you're never late. 

Look at your "utilization ratio"
How much are you charging on each of your cards, and what is their credit limit? This is something you always have to keep in mind. Many business owners likely aren't aware of the damage that maxing out their credit cards can do to their credit score (and therefore, to their ability to obtain small business loans). As a general rule, never ring up more than 30% of your limit on any given credit card.

Pay down your debt
Finally, you've got to make conscious priorities regarding the debt you're paying down. Your credit cards, for instance, have a massive effect on both your personal and business credit scores. So, always paying down your credit card debt first - even if it means you need to pay less on something like your student loans during a given month. 

For more tips about your business credit, click here

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The Fastest Ways to Give your Business Credit Score a Boost

As we've previously discussed, few factors are as important when it comes to accessing small business financing as your business credit score. In fact, both your personal and your business credit scores are some of the first things that lenders look at when you apply for a loan on behalf of your business. So what can you do to give those scores a boost - and earn your lending profile some extra muscle as a result? 

Dispute any negative charges
Many find - to their own disbelief - that their credit score is negatively affected by charges they did not incur, or by charges that are more than 7 years old (and thus shouldn't have an effect on their credit score.) For this reason, all business owners should be reviewing their credit reports regularly, and investigating and disputing any charges that don't hold water. One of the most important parts of building a strong credit score is ensuring your score has been verified accurately.

Make your payments - as many as possible
If you want to make positive movements in regards to your credit score, all your past-due payments need to be made. If you're carrying around delinquent charges, then your score will be taking hits regularly as a result. To build a strong credit score, you need strong payment data - and you can earn it by making all of your payments on time. 

Don't max out your cards
If you're making use of all your available credit, then your score will take a hit as a result - so the less that you charge to your cards or business, the better off your score will be. This is yet another way to get your credit score looking as attractive as possible - which, in turn, will make your business look much more attractive to lenders, both at banks and non-bank lenders like OnDeck.

 

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