As with almost all of our business transactions today, it well pays to be careful in what we share online. The instant access that people have online makes it even more convenient, easier and faster for anyone with a small business to gain access to tools and access to many forms of financing online.

One of those financing systems that business owners can take advantage of today is business loan applications. This loan helps them get the money to pursue their business expansion or just the money needed to increase their chances of success in their endeavors.

Even with the instant access that people have online, they still get a lot of barriers to the access of these financing opportunities. These people may not be able to get the support for their small business mainly because their applications have errors in them. Many small business owners don’t get the opportunities they need because of denied business loan applications or loans with less than optimal interest rates. Why? This may sometimes be caused by an application without the required comprehensive research and claim that the bank needs. That’s why when applying for a business loan, you must ensure that you avoid the following mistakes.

1. Make sure you check your credit score.

Did you not know that even in a simple business loan application you must ensure that your credit score doesn’t have any factors that redden its standing? Your credit score is paramount in giving you the reputation as a business owner who wants to have a loan. Your credit score will also determine the kind of business loan that gets approval. Whether you want a significant funding for a project or a small but highly needed loan, a good credit score can help you land the best interest rates for your investment.

For example, if the average score of your credit report is at least 700, you can easily find yourself in great shape regarding being approved and given a considerably favorable business loan. However, if you get a score of 650 or below, that will cut your chances of approval, as well as high-interest rates that the bank will confer on you.
Before applying, make sure you settle your credit score first by improving the score. Otherwise, you might be wasting time for a business application that you may not get. How do you do this? You can settle your credit score by monitoring it with three reporting agencies int he market: Equifax, Experian, and the TransUnion. Checking with these agencies your credit score, what is contained in your credit report and checking whether you have misrepresentation in any of the statements will make sure that your application will get fair chances of approval.

When you find a mistake in your credit score, immediately settle the credit with the reporting agency. You can do this n the form of writing in the quickest time possible because it takes a long process just to correct a simple data error.

2. Don’t forget writing a business plan.

What does your business provide to the society? How is it going to generate income? What is the marketing strategy for your brand? Will you need a lot of infrastructures to achieve the goal? These are questions that your bank needs to know before approving any business loan. These are also questions that you can answer only by writing a good business plan. Without such a plan, it may well be hard for your business to know where and what your business projections will be.
You have to put all these questions not just in your head, too. You need to put them all in writing and makes sure that your lender knows every detail that your business wants. How will the lender know if your chances of approval are high or whether your business is well thought-out when you don’t put them in writing? It makes a whole lot difference if you place your ideas in a business plan that’s well-articulated and well-researched. It may mean the difference in getting your business loan approval on the first try.

3.Your financials are not readily prepared.

Nothing hinders your approval like a poor bank statement record. You won’t be able to get your loan if you’re not able to show the lender that you have a history of good financial standing. Show them your bank statements for the last six months and your tax returns for the previous two years that you did work for, and you’ll get better chances.
You also need to show them your cash flow analysis and a forecasting of where the revenue will come in a particular time frame. The good thing about this issue is that you can get software to analyze for you. Just get a business accounting program such as Quickbooks, run a calculation, and you will now have a good idea of your business financials way before submitting your loan application.

4. Collateral

It’s important to make sure that lenders will have a way to guarantee the return of their money. Although in recent years, lenders have found a way to ease their approval of small business owners, banks still require small business owners some good collateral to make sure that the loans are guaranteed.

The collateral will serve as the lender’s insurance policy that if the business won’t fly, there is a valuable personal asset that the bank can claim to offset the damage. If you can’t find a collateral as a guarantee to get your loan approved, it can be much more difficult to see a good lender that will be willing to work with your business ventures.

Wrap up:

There’s a lot of factors that lenders or banks can disapprove your small business loans. The factors we listed above are the most common ones that you should take note of if you want to get your funding and loans easily approved. Avoiding these mistakes will not guarantee you an investment, but they will indeed increase your chances of approval.

Coming up with a great idea for a business isn’t the same thing as launching a business. Wanting to take the steps to start a business isn’t identical to actually starting the enterprise. Motivation counts for a lot. So does an initiative. Nothing, however, seems to be more important than to acquire the necessary amount of money required to actually start the endeavor.

Launching a new business cannot be done without spending money. Rent, supplies, advertising, and more all come with costs. Without the necessary money to pay for these things, a business idea remains a business idea. Seeking out a loan probably would be the most common means people actually finance their small business endeavors.

The trouble for many budding entrepreneurs is they find loans can be tough to be approved for. A lack of credit or, worse, a poor credit history could lead to being turned down for one loan application after the other. Dreams of starting a new business need not be dashed due to lack of loan funds. More than a few reliably alternatives and strategies exist that can turn business dreams into realities.

The Slow Growth Progressive Model

Who said everything has to be launched all at once? Some of the biggest corporations started out as small home-based businesses. While a particular business model might seem perfect for a full-scale launch, the loan capital just isn’t there. So, progress in the form of slow growth could be tapped as a substitute to take its place.

Raising Money through Venture Capital and Equity Funding

Even with the progressive model, there may be a need to raise money from other sources. Without the slow-building approach, there definitely exists a need to raise money from somewhere. In the modern entrepreneurial landscape, various means exist in which a startup small business could potentially be funded.

Venture capital investing and equity funding are two very bold and prominent ways in which money can be directed towards the launch of a business. Venture capital funding probably would be difficult to procure unless the small business was based on a concept investors found potentially very lucrative.

With venture capital, a firm infuses and invests money into a startup business. The venture capitalists own a portion of the company and reap the rewards of its profits if successful. The firm might even buyout the company at some point.

With equity investing, money is injected into an already existing business. The very early startup stage would not be when an equity firm seeks to put money into a company. Both venture capital and equity investing require selling others on the growth and profit potential of a company. Is that easy? No, but it has been done in the past to great success nonetheless. Exploring either option wouldn’t necessarily be a bad idea. Just be aware of the difficulty of being approved.

Seeking Out Crowdfunding Opportunities

Crowdfunding is a lot like venture capital funding with one huge benefit: if done through a donation strategy, no obligation exists to pay investors. Many people seeking assistance through online crowdfunding ventures simply ask for donations. No guarantees exist that people will donate even when notified the business intends to serve a good cause.

Other crowdfunding strategies can be utilized. Reward-based crowdfunding provides those who contribute money with some sort of compensation. Payments of royalties — without any guarantees — would be an example of how to reward those who put money into the venture.

Crowd-lending is a spin on traditional crowdfunding. Actually, the process is a form of peer2peer lending in which private parties lend money with the expectation of being repaid. Two caveats exist when seeking out crowd-lending opportunities. First, there is no guarantee anyone would fund the loan. Members of peer2peer lending services have the option of turning down loan requests. Second, the interest rates on such loans are sure to be very high.

Investment variants of crowdfunding exist as well. Those putting money into a crowdfunding venture with intentions of seeing a return on their investment may be willing to direct funds towards a promising business venture. Unlike venture capital, equity and ownership stakes in the business do not come into play.

Certain crowdfunding enterprises are more accessible than others. Would-be small business owners should at least conduct research into which ones exist and what they can potentially do.

The Friends, Family, and Others Approach

The old standby of asking family and friends to help financially support a business venture should never be dismissed. At times, the best people to approach for assistance are those closest to you. After all, they know you and your character. You become less of a question mark to them. Would this be the case when approaching a peer2peer lender?

Asking for assistance does not refer to charity, either. The financial support of friends and family could be directed towards a partnership agreement. The partnership doesn’t even need to an active one. A silent partnership agreement remains an option.

No Loans and No Problems

A loan might be the first funding option that comes to mind when someone wishes to start a business. The inability to receive approval on a loan should not make any budding entrepreneur despondent. Other opportunities exist and they may prove to be both more beneficial and productive.

Gold and its relationship to subprime auto loans is an interesting circumstance to ponder. For instance, historically gold has been a safe haven in times of crises and while today there is an active move afoot to suppress precious metals, physical, not paper gold remains a reliable store of value as it has been for millennia.

Contrast this to subprime auto loans which are roughly a $1 trillion market. To understand the basics here, the term ‘subprime’ refers to a higher risk pool of borrowers with weak credit histories and higher propensity to default when compared to prime borrowers.

The combination of a new expensive car, a loan approval packaged with an extended pay back period, up to 7 years or more, has inflated a bubble in this sector that spells trouble. Auto loan delinquencies are on the rise. Used car inventories are rising. Subprime borrowers with upside down loans where they owe more than the car is worth combined with and an anemic economy with falling real wages is fueling yet another bad situation that has this group of borrowers choosing to walk away from their loans further weakening that category of borrowers credit worthiness. The riskiest version is ‘deep’ subprime and that category has increased to almost a third of the subprime loan market. Couple that with unverified loan applications and increasing instances of fraud, and the set up for losses is fully staged and prepped.

This should be a source of great concern as billions of dollars worth of these subprime loans have been repackaged into ‘diversified’ securities and have been sold to investors. Usually even this risky sort of investment would be fine, but given the sheer number of subprime borrowers falling behind on payments, with rising delinquency and default rates and this sort of investment becomes highly problematic. Roughly 5% of the bundled securities sold to investors are delinquent, and its rising as economic issues are weighing heavily on Americans’ budgets.

Subprime auto lending isn’t the only problem sector worthy of note. Mortgages are once again in a bubble, student loans are in a bubble, credit card debt is in a bubble, banks with huge exposure to derivatives are a concern, central banks printing money which makes the money we have worth less, and currencies around the world are in a death spiral to zero as devaluation and inflation are actively pursued as policy.

Never forget that the fate of all fiat currencies is to eventually move to their intrinsic value of zero which isn’t a good thing for investments based on these currencies. We are fast approaching that point. Combined, all these factors point to a clear sign of real trouble ahead for not only the US economy, but the economies of the entire planet. There will be an eventual stampede towards safe haven investments.

Given all of these troubling indicators, gold will once again be in a position to insure against losses when these bubbles burst. Caution, if you don’t hold it, you don’t own it. So I’m not speaking of investment in ‘paper’ gold, rather physical gold. As a rule, precious metals serve as the investment to be in when panic sets in and times get turbulent. Gold’s propensity to be independent relative to correlation to other financial assets is another plus for having physical gold in your portfolio as markets creep ever closer to the abyss.

Gold has been money for nearly five thousand years even though the world has abandoned it as the standard backing paper, fiat currencies. Fiat currencies are backed now only by faith in the issuing government, in essence nothing. Contrary to devaluing fiat currencies, derivatives and investments in subprime loans packaged into securities as a risk filled search for yield, physical gold has always been tangible, durable, portable, divisible, fungible or interchangeable, a unit of account, and a store of value.

Probably the biggest advantage precious metals like gold have is that there is a finite amount, it’s relatively scarce which is a plus for holding value. Gold as money, unlike paper currencies, can’t be printed at will. Gold must be mined, and again, the amount to be mined is finite. History teaches us that paper currencies have a 100% record of failing in the end as a store of value. Every single fiat currency in history has gone to zero value. All these realities continue to be good for gold as an investment. Gold is forever and stable, while investments like subprime auto loans are highly unstable and prone to severe, even total loss.

Automobiles are as American as hot dogs, pizza, ice cream, and apple pie. Autos continue to be a large sector of our economy and the mere fact that lenders and investors are making a market for subprime borrowing is a huge warning sign similar to that of the mortgage crisis back in 2007. If the Federal Reserve keeps moving away from its zero interest policies of the last decade and continues to raise interest rates, then these and other factors listed above bode well for investors in gold.

PayPal Makes Investment in StartUp

PayPal has decided to make what it is calling a strategic development in the financial company Lendup. The deal was announced at the end of June. The popular payment sending and receiving service’s decision will help support what is known as overlooked borrowers. The details of the actual investment amount and why PayPal made this choice is not yet known. But PayPal has indicated that it wants to have a full-service portfolio of options for customers while decreasing risk. Overlooked borrowers are being considered by many institutions. However, loan risk remains a concern.

The Overlooked Borrower

Overlooked or risky borrowers are an underserved group by most financial institutions. This is in part due to the risk that they represent. Other lenders like Lending Club and On Deck faced low fourth-quarters because of their business with risky borrowers. Richard Love an analyst at Rafferty Capital Markets says this is due to a failed thesis:

“Lending Club and On Deck operate under the thesis that the poorest people or the weakest companies can pay the highest interest rates for the loans that they make. The basic concept is flawed. That strategy has been employed for a long, long period and it’s never worked in a public company.”

These two companies are part of the fintech which is to say that they, along with other companies use computer programs and other technologies to facilitate financial transactions. Companies like these have risk associated with them as Lending Club and On Deck illustrate. But technology can help improve products or services. Companies just have to find a better way to implement them in a way that is both safe and responsible for the economy.

Determining ways to engage the overlooked or underserved borrower is something that lenders are starting to examine closely. Standard tools such as credit reports are still being utilized. But real-time behaviors are also considered too. These include:

• Checking and savings account levels
• Payment patterns
• Overall loan history
• Willingness to participate in financial tutorials
• Credit and bank account monitoring

By engaging in these practices, companies are able to attract a better type of borrower, to begin with. In exchange for these insights, borrowers are given incentives such as better loan rates or lower payments after a length of time.

LendUp

LendUp is a San Francisco-based startup that has expanded into the underserved borrower marketplace. The company considers itself to be a responsible lending platform and serves borrowers that other banks might not approve otherwise. It offers a ladder system that gives borrowers points for every on time payment made. Borrowers can also receive points for completing credit education tutorials online.

There are two main products offered to borrowers. The first is a payday loan amounting anywhere from $100-$250. The lending period lasts anywhere from 7 to 30 days with $17-$44 in fees to repay. Installment loans are next and range from $250 to $1000 in 2 to 12 payments. Fees vary.

Recently, Lendup announced an expanded partnership with Beneficial State Bank for its L Card. The L Card is a credit card that has been in pilot testing since 2015. The card is aimed at those with damaged credit files or poor credit score that has not been able to secure products from mainstream banking institutions. Sasha Orloff, co-founder, and CEO of Lendup wants to serve the $350 billion market of customers that are usually excluded due to credit:

“As a mission-driven company, we’ve built our business by putting the customer first — that means house-built technology, embedded education, and safe, no-gotcha products. We are proving we can reimagine credit products for the emerging middle class that makes a positive impact on our customers’ lives. With Beneficial State, we’re more than ready to take it to the next level with the L Card expansion. Between our technology, product innovation and mission, we will continue to completely reimagine what had previously been known as the ‘subprime’ category and become these deserving borrowers’ financial services partner of choice.”

The PayPal Investment

While PayPal did not disclose the terms of its investment in Lendup, it does seem to indicate that the company wants to be a part of the underserved borrower market. PayPal has also wanted to be a payment leader in the industry for quite awhile. In order to accomplish this, it has to offer a full menu of options. Lendup would do just that.

PayPal’s CEO Dan Schulman has emphasized that offering credit products is an important part of the company. It already offers PayPal Credit for consumers to finance purchases online. The working capital program provides financing to small and medium businesses. These offerings are incredibly successful for merchants, customers, and PayPal because more money is spent overall compared to places where PayPal is not used.

Like other financial companies, PayPal has been hit by loan losses of over $129 million in the most recent reported quarter from consumer and business programs. The investment in Lendup could be a step in the direction of partnering with more institutions and thereby reducing the risks on their balance sheets. Lendup would give PayPal the access to underserved customers without having to take on the risk burden which would be a positive for investors.

The PayPal investment also brings Sasha Orloff and Dan Schulman together. The Lendup and PayPal CEOs are leaders in the fintech industry. With PayPal’s large global reach and Lendup’s ability to save customers money, over $150 million to date, the deal will mark a positive step in the fintech industry’s ability to help make financial transactions easier to complete and cheaper overall. It may also begin to change the perceptions around emerging middle-class borrowers for mainstream lenders at some point in the future.

In the last year or so, it is beginning to seem like Amazon is becoming untouchable. From cloud computing and tv shows to credit cards, Prime Day and bookstores, they are controlling lots of different facets. And now, it seems that Wall Street is starting to focus on Amazon’s announcement that they are acquiring Whole Foods now. This is just another component of Amazon’s ever-growing empire which is beginning to gain more and more attention worldwide. Amazon has a lending business.

Amazon’s Lending Business

In the past year or so, Amazon has lent more than over a billion dollars to their marketplace sellers in the form of business loans. Amazon launched their lending business back in 2011. Since the beginning, they have lent over three billion in small business loans to over twenty-thousand Amazon sellers throughout the United States, Japan and the United Kingdom.

The company has created the lending part of their business to make it easier for new and small businesses to easily and efficiently get a small loan. For some businesses, getting the capital they need at the right time can be all that they need to grow their business and set them up on the right path to success. The vice president of Amazon, Peeyush Nahar, has said that small businesses are the DNA of Amazon and that their success is important for the overall success of the company. Amazon provides the capital to these businesses that will help them to expand their operations and inventory at critical times in their growth. A small loan can sometimes go a long way for small businesses trying to succeed.

How Amazon Lending Works

The lending is only available on an invitation-only basis. Amazon will offer some of their sellers short-term business loans ranging from $1000 to $705,000 to businesses of all sizes that sell through the platform on Amazon. The company will not make public the interest rates that they offer to their sellers. However, they are typically lower than most rates on credit cards.

The merchants who accept the loans can be approved to get their funds within one business day. In many cases, the loan funds are used for financing more inventory or for expanding current business operations. Amazon doesn’t require the sellers to go through lengthy application processes like with traditional lenders of small business loans. Instead, they will use a special algorithm to invite certain sellers into the loan program based on the popularity of their inventory cycles, products and additional factors.

Most loans are repayable in a year or less. The fixed monthly payments are paid through the Amazon account of the seller. The payments will be deducted from the sales the account holder generates. With Amazon’s loans, the sellers will pay no origination fees or penalties for repaying the loan off early. According to information from Amazon, more than half of the original loan applicants will go on to request a second loan at another date.

How Amazon Benefits From Their Lending

There are many ways in which Amazon benefits from lending small business loans to some of their sellers. Below are some of those benefits.

• Amazon earns interest profit from the loans that are given to the sellers.
• The third party sellers will be able to sell more of their products. This means more commissions for Amazon through the portion of merchant sales they deduct for all sellers.
• Amazon is able to mitigate some of the credit risk by the ability to access their own data on the sellers and customer reviews in real time to see if they are a good fit for a loan.

Is Amazon Trying To Be Like A Bank?

Many are left wondering if Amazon continues to grow their lending services, will they start to look more like a bank instead of just a top site for customers to find great deals on retail items? According to a recent study, thirty-one percent of the survey takes said they would switch from their traditional banks to one from Google, Facebook or Amazon if they offered the same services. In a separate report done recently, it was found that Amazon has a higher customer satisfaction rate than other banks such as Capital One, Citi and TD Bank.

Many traditional banks have cut back their small business loan lending because of a financial crisis. This gave rise to alternative sources for small businesses to get loans for growth and inventory. Amazon saw this need and filled it. Companies like Square and Paypal use data from their businesses to offer credit solutions to their merchants who might not have had access to other traditional forms of loans otherwise. Together, both Paypal and Square have loaned out billions of dollars to their merchants.

Amazon’s Considerations For Expanding Into Banking

There are many questions being asked about Amazon’s consideration for expanding further into financial services for sellers and customers. Below are some of the concerns and questions being raised.

• The traditional banking business is out of reach. Will Amazon be able to copy their business model built on obsessive customers into the financial services area?
• Will Amazon’s merchants want to be able to diversify their dependence on Amazon and instead seek financing through other sources? Or will they want to have a single source of selling and financing? For some merchants who are interested, they will have everything in one place including lending, selling, packing, delivery and inventory management.

Amazon Lending is a company to definitely keep an eye on right now. This type of synergistic business will be playing an increasingly important role for all of Amazon for many years to come.

The millennial generation, especially small business owners, are constantly connected – often blending personal time off with business due to the easy availability of mobile connectivity and videoconferencing. Fifty-nine percent of workers use mobile devices after normal business hours, and an even higher percentage of millennial workers do so, and the global productivity hit caused by the resulting employee burnout amounts to $300 billion annually.

That fact is at odds with an increased expectation of work-life balance, which is desired but often difficult to achieve. According to a recent Marriott Rewards Premier Business Credit Card survey, while many millennial business owners understand and actively seek the privilege of completely unplugging from work, only 25 percent are able to do so.

Those business owners may have the advantage of videoconferencing to replace the need for frequent business travel, but at the same time, business travel remains part of the business world, and the concept of the “road warrior” is nowhere near obsolete. It takes a toll, especially for those business owners who must travel on a weekly basis.

Those millennial business owners are less likely to take personal time or vacations – but instead are starting to combine business with pleasure. According to the Chase survey, 85 percent of millennial small business owners take personal time on a business trip, often adding an extra day or two for personal time.

The trend, sometimes referred to as “bleisure” for the combination of business and leisure, not limited to business owners, and employers are also urging millennial workers to extend business trips to enjoy personal time.

This generation is known for seeking non-monetary, work-life balance benefits in their jobs, and so these extended stays become a valued perk which results in higher job satisfaction. And because the travel expenses for bleisure trips are usually carried by the company, the employee has less of a need to go into debt, or use credit cards to fund vacation trips.

While millennials combine business with pleasure far more than their Baby Boomer predecessors, they are also leveraging more state-of-the-art communications and collaboration technology, which minimizes the need for those trips in the first place. The digital meetings that often replace face-to-face comes with their own set of work-life challenges though.

Those younger workers find working at home advantageous, but at the same time, they find they work better in teams. Some companies are offering a solution to combine this flexibility with a more team-based approach, with the creation of “huddle rooms,” or small rooms at headquarters which allows colleagues to meet, face-to-face, virtually, or a combination of the two.

The very definition of “job” is rapidly changing, and the older model – which kept business and pleasure separate, relied on travel and face-to-face meetings, and lacked remote options in favor of an in-the-office, 8-to-5 sentiment – is giving way to this new reality that blends business and pleasure, office and home.