Month: July 2022

Are you a small business owner that has been denied a business loan? Opening, managing, and running a new business can be quite pricey, especially if you are just beginning your business journey. Many start-up companies and small businesses apply for business loans to help them jumpstart their new business, however, only a fraction of applicants are approved. Business owners run into the issue of being unable to pay for the expenses of starting up their small businesses and the issue of loan applicant disapproval is only going to get worse. In fact, within the last several years business credit card approval rates have significantly declined. As inflation is increasing small business owners are struggling to cover their expenses. Continue to read this article if you are one among many business owners that are looking for resources after being declined a business loan. We will discuss the following business loan alternatives:

• • Online lenders
  • Business grants 
  • Raise equity 

Online Lenders 

What is an Online Lender?

Online lenders offer loans that aren’t typically associated with a traditional bank. They are an alternative to a traditional bank.

Typically, online vendors offer a variety of small business loans. Additionally, they are more flexible than bank lenders when it comes to requirements. Though online lenders are more flexible, normally the cost to borrow is higher 

Due to inflation, it is likely that the Federal Reserve is increasing interest rates and will continue to do so. For this reason, banks are experiencing economic changes that drastically change the flow of money within their financial institutions, making it hard to be accepted for small business loans. This is where lenders come into play. They fill the space that financial institutions aren’t filling within the market, and offer revenue-based financing as well as business advisory services. 

Online alternative lenders won’t feel the pressure that banks are experiencing during inflation and a market crash because they normally charge higher interest rates than traditional banks, that in turn, make up for money lost during that time of the market. 

When looking for the best lender for you and your small business, it is important to do thorough research and consider the following:

• • Types of loans available 
  • Funding speed 
  • Customer service
  • Eligibility and requirements
  • Interest rates 
  • Fees

You don’t want to take out a loan for your up-and-coming business just to be even more in debt. In the end, the loan should help you while your business gets on its feet. There are lenders that can help you based on your needs and can provide you with the funding within a few days of submitting your application. If you are a business that does not have time to wait, online lending might be best for you. Many businesses such as construction contractors, may need funds as soon as possible.  This business loan alternative is the quickest way to receive the funds you need. 

Business Grants

What is a Business Grant?

Business grants are money that is awarded to businesses that are in need. Loans are money borrowed, while grants are awarded and do not need to be paid off. 

This option may be the best alternative to business loans. However, it may be difficult to be awarded a business grant. Business grants are awarded by federal, state, and local governments. Furthermore, many private corporations have business grants. 

The best way to find a grant that you are eligible for is by doing your own research. Depending on your needs, experience, and type of business, eligibility requirements will differ. Grants such as Grants.gov has thousands of different grants for small businesses. 

Additionally, there are local agencies and corporations that have programs made specifically for promoting companies, expansion, and job creation. To support these ideas, they offer free resources to small business owners. These local organizations often offer large business grants and some offer small loans at a low cost. 

Though this would be the safest and best option when searching for business loan alternatives, it is very competitive and time-consuming. Applications are normally lengthy and oftentimes require an in-depth essay submission. Furthermore, there are hundreds, possibly even thousands of applicants that are applying for the same grant as you. Once your application is submitted it may take months to receive news on whether you were awarded the grant or not.  So, if you are in a situation where you need funding as soon as possible, this may not be the best option for you. Alternatively, if you are able to wait, applying for a business grant does no harm. For example, if you own a small cleaning business, chances are you are quite busy and have the flexibility to wait for the results of your grant application submission. 

Raise Equity 

What is Equity Raising?

Equity raising is when a business raises capital to increase the funds they are receiving for business growth. This allows your business to increase the amount of money it is making by increasing prices. 

This business loan alternative will only work if your small business already has a solid customer base, and you are sure you can continue to rely on these customers. For example, if you are a home-based nail artist, chances are you will continue to grow customers, and maintain a busy schedule. Businesses like such can expect customers to pay the difference because they are paying for the experience, creativity, and capability. 

Similarly, small business owners can consider equity crowdfunding. This is when you raise your online capital, and investors give you capital in exchange for equity ownership. Essentially, it is selling shares of your business and company to investors. It is important to consider whether you would like others to be a part of your company and its growth and if you are willing to share your company. 

This business loan alternative is not easy or quick. To begin, business owners need to make sure they meet the guidelines rules, and regulations. Additionally, you would need to run fundraisers and campaigns which is time-consuming, stressful, and tedious. However, it may be worth it because of the potential money you can make. This business loan alternative is best for those who have a lot of time to spare prior to receiving the funds, are willing to share their company,  and put in the efforts and time for fundraisers and campaigns.

Overview 

Hopefully, you have found clarity on which business loan alternative would be best for you and the needs of your company. It is not easy running a small business in the times that we are currently in. Ensure you are thoroughly researching the method that you choose prior to moving forward. Below is a brief reminder of what we have discussed for business loan alternatives:

Online lender: 

• A loan from a non-traditional financial institution
• Typically costs more in the long run 
• Easier application process
• More likely to be approved
• Funds are often available within days 

Business grants:

• • Money awarded to a business in need
  • Do not have to pay any money back
  • Very competitive
  • It May take months-years before receiving funds if chosen

Equity raising:

• • Raising the price of your services, goods, or products
  • A slow progression to money increase
  • Only works if you have a steady, consistent customer base
  • Can consider shareholders 

There are both pros and cons to using Zelle for your small business. As a small business owner, one aspect to consider is the method of payment you will be utilizing to collect payments and invoices. Some small business owners utilize Zelle as their method of payment. Continue to read this article if you are interested in utilizing Zelle for your small business. We will discuss how to use Zelle, and its pros and cons.

What is Zelle? 

Zelle is a digital payment network that allows users to instantly transfer money. Zelle is used through certain financial institutions. In order to use Zelle as a method of payment, you would need to open a bank account. Essentially, you will be going through your bank to use Zelle. 

There are seven different US banks that own Zelle and it is used as a third-party payment method by most US banks and credit unions. In order to use Zelle for your small business, you just need to enroll by using your bank’s mobile app. The 11 major financial institutions in the US are eligible for Zelle. Additionally, Zelle offers their services to hundreds of financial institutions in the US. 

Although Zelle has extended their services to many different financial institutions in the US, they do not offer specific business features to business owners. The services that Zelle offers are the same for all users. However,  Zelle is a great way for businesses to receive payments, and it is free and contactless. Zelle offers free services, however, it is important to check with your bank if they charge fees for using Zelle. Additionally, it is not a service offered internationally and it does not have a purchase protection program.

Who Can Use Zelle?

Anyone who is interested in using Zelle needs to open a bank account. Both the business owner and customer or client need to have a bank account in order to use Zelle. Your customers and clients do not need to use the same bank as you, they just need to have a bank account open. 

For small businesses, you would need to open a business bank account with a financial institution that offers Zelle for businesses. Not all financial institutions offer Zelle to business accounts, so it’s important to make sure that you can use Zelle with the bank that you have opened your business account. To check if your bank offers Zelle as a method of payment, check your banking app about the specifics. If you can enroll in Zelle with your business banking account, you will use your mobile phone number and email address. This will be how customers and clients find your Zelle to send you their invoices and payments. If you already use Zelle for personal reasons, you may need to use different contact information when enrolling in Zelle for your small business. We will go more into detail about how to use Zelle later in this article. 

Here are the 11 financial institutions that offer business Zelle integration:

• • Chase Bank
  • Citi Bank
  • Bank of America
  • Frost 
  • FirstBank
  • Bank of the West
  • Truist Financial 
  • Wells Fargo
  • Morgan Stanley
  • US Bank
  • Investors Bank

How Do I Enroll in Zelle?

As previously mentioned, Zelle is a third-party method of payment and integration that some banks offer for small businesses. So, if you have opened a business account, you would just need to make sure your financial institution integrates Zelle with its services. If Zelle is not an option for you, but you would like to use Zelle as your preferred method of payment, you may want to open a business account with a financial institution that offers Zelle. The bank account that you enroll for Zelle with will be the account that money comes in to and goes out of. 

For example, Alex has a graphic design business. She enrolled in Zelle with her Chase Business Account. She designed a website for a client and has informed her client of the price. The client then sends Alex the money through Zelle, and the money is instantly transferred into the account that Alex enrolled her Zelle with. In order for Alex’s client to send the money, they had to access the mobile app of the bank account that they enrolled their Zelle with, and send the payment on Zelle through their bank’s mobile app. 

Prior to enrolling with Zelle, choose the bank account you would like to receive payments from and enroll through the financial institutions’ mobile app. On the banks’ mobile app,  you would just need to navigate to Zelle and enroll with your email or phone number. The email or phone number you use will be how customers and clients find you and send money to you. 

For example, Alex received a new client and sent the client the email that they used to enroll their Zelle with. To find Alex’s Zelle to send money to, the client needs to access their Zelle through their bank’s mobile app and search for Alex’s Zelle by inputting Alex’s email. This is how clients and customers find your business — via email or phone number. 

Make sure you are not using an unprofessional or complicated email. This will avoid complications when customers and clients search for your Zelle and will also avoid money loss. Additionally, don’t use a phone number that you want to be kept private or that you plan on using for another Zelle account for personal matters. 

How Does Zelle Work?

It is fairly easy for both small businesses and customers to use Zelle. It’s easy because most US banks have already integrated Zelle with their mobile apps. So the only course of action you need to take is to enroll in Zelle through your financial institution’s mobile app. This process is quick and easy. In order to send and receive money, both parties need to have a Zelle account. So keep in mind that your clients and customers will need to have a Zelle account in order to send payments. Though we touched on how Zelle works, here is a step-by-step process of how customers can pay small businesses for purchases and services:

1. 1.  The business provides its clients and customers with their Zelle contact information. This will either be the phone number or email address that they used to enroll in their business Zelle account. Never give customers, clients, and strangers your banking information. To send money via Zelle, bank information is not needed. 
   2. The customer or client inputs the given email or phone number, and the amount that they owe. They then send the payment to the business owner. For first-time recipients, Zelle may send a verification code via text message or phone call for verification purposes. 
   3. The recipient of the payment— in this case, the business owner— will be notified via email, text message, or bank mobile app notification that the payment has been received and is available in their bank account 

How Much Does Zelle Cost?

Zelle does not charge a fee for money transfers. However, there may be fees and transaction limits depending on your banks’ rules and regulations. While most major banks do not charge service fees, you may want to double-check prior to performing transactions for your small business. 

Additionally, your bank may limit the amount and how many times a Zelle transaction is done per day. Limits may differ depending on the type of account you have and whether you are sending or receiving the payment as well. Below is a list of Zelle limits for major banks:

Bank of America 

$15,000 per 24 hours 

$45,000 in a seven-day span

$60,000 every 30 days for small businesses

Up to 20 transactions per day

Up to 120 transactions per month 

No receiving limit

Chase Business Account

$5,000 per transaction 

$5,000 per day 

$40,000 per month 

No receiving limit 

Wells Fargo

$3,500 per day 

$20,00 per month 

Receive up to $10,000 per day 

Capital One 

$2,500 per day 

No receiving limit

Discover

$600 per day 

No receiving limit 

PNC Bank 

Varying sending limits that can be found on your mobile app or account information

No receiving limit 

US Bank

Varying sending limits that can be found on your mobile app or account information

Citizens Bank 

$1,000 per day 

$5,000 per month 

15 transactions per day

No receiving limits 

What Are The Pros of Using Zelle for Small Businesses?

There are pros to using Zelle as a method of payment for your small business, but ultimately it will be up to you, as a business owner, to decide if this method of payment is the best choice for you and your clients and customers. Read further to find out what the pros of using Zelle are.

Contactless

Zelle is a contactless payment method. Business owners do not need a transaction resource to process payments, and clients and customers do not need a physical form of payment. Cash or cards are not required — the only requirement to complete a transaction with Zelle is a phone, bank account, and Zelle enrollment. 

Instant pay

As many transactions take at least 24 hours to complete, if not longer, Zelle payments are instant. When transferring funds between two bank accounts through Zelle, payments take no more than a few minutes to process.

No fees

As we previously discussed, Zelle is free to use. Very few banks enforce a transaction fee. Check with your bank to learn about their transaction fees and transaction limitations. 

What Are The Cons of Using Zelle for Small Businesses?

As with any other method of payment, there are a few cons to using Zelle for your small business. Zelle may not be for every business owner, and it’s important to understand what the cons are so you can decide if it is a payment method that will make running a business easier for you. 

Only available in the US

Zelle is not available to international banks, it is only available to US banks. So if you are a business that will be in a tourist area, you will not be able to sell your goods and services to tourists who only bank with international financial institutions. The same goes for online shops. International customers will not be able to send you money when they buy your online products. Additionally, if you plan to expand your business outside of the US, this method of payment will not be a good fit for you.

No purchase protection program 

Sending money with Zelle can be risky. Zelle doesn’t protect any payments made through their network. Payments made through Zelle also can’t be canceled. Once a payment is sent, there is no way of getting it back. If your customer inputs your number or email wrong and sends the payment, they cannot reverse or cancel the transaction. Because of this, customers and business owners prefer a secure method of payment so there is no loss of money. 

Can’t use credit cards

Credit cards cannot be used for Zelle transactions because Zelle is a network that directly transfers funds between two bank accounts. As many customers prefer to use credit cards this may be an issue. 

What Types of Businesses Would Benefit From Using Zelle?

Zelle will mostly benefit small businesses. Because large businesses have customers and clients throughout the world, do not have a protection program, and do not allow customers to use credit cards, it would be more of a hassle than a benefit. However, there are many small businesses that can benefit from using Zelle. Below is a list of examples of small businesses that may benefit from using Zelle:

• • In-house nail services
  • Gardener or landscaper
  • Cleaning services 
  • Graphic Designer 
  • Freelancer
  • Car mobile wash and detailing services 
  • Photographer 
  • In-home or online tutor 

Alternative Payment Methods 

Transact 

Transact is an efficient payment method that allows businesses, small and big, to instantly send and collect payments via SMS without users having to create an account. Once a business receives an order or purchase, a text message is sent to the buyer and they can directly pay from there. Within the text is a link that directs customers and clients directly to their bills. They do not have to create an account, they are able to quickly pay and complete their purchase. 

Many business owners are willing to pay credit card annual fees because of the perks that come along with it. Additionally, annual fees on business credit cards are considered to be a tax-deductible expense. This may be worth it for businesses that have been in the industry for a long time. However, if you are a small business owner, the additional expense of annual credit card fees may become costly. As a small business owner, it’s important to save as much as you can, while still being efficient. Continue to read this article if you are interested in business credit cards that do not have an annual fee. 

Bank of America Business Advantage Travel Rewards World Mastercard Credit Card

If you are a small business owner that travels a lot and uses different airlines and hotels, then the Bank of America Business Advantage Travel Rewards World Mastercard Credit Card might be best for you. With this credit card, you can earn 1.5 points for every dollar spent on purchases and 3 points for every dollar spent on airline booking through the issuer’s Travel Center. The points you receive can be redeemed for credit on any purchases made for travel. There’s also a starter sign-up bonus. Upon being accepted for the credit card, spend $3,000 in net purchases within the first 90 days and receive 30,000 online bonus points. These points can be redeemed for a $300 statement credit toward dining and travel-related purchases. 

Bank of America Business Advantage Customized Cash Rewards Mastercard Credit Card

The Bank of America Business Advantage Customized Cash Rewards Mastercard Credit Card allows users to receive cash back. Receive 3% cash back in a specific category of expenses of your choice and 2% at restaurants. Receive up to $50,000 a year in combined 3%and 2% spending as well as 1% cash back on miscellaneous purchases. You can change the category for the 3% cash back system. These categories consist of travel, gas, TV, office supply stores, business consulting services, telecom and wireless, and computer services. As a sign-up bonus, receive $300 as a statement credit online bonus once you make $3,000 in net purchases within the first 90 days. This no annual fee credit card has cash rewards that do not expire. 

Chase Ink Business Unlimited Credit Card

If you are an entrepreneur who has noticed that you are spending your money that falls into certain categories, consider applying to the Ink Business Unlimted Credit Card. Get unlimited 1.5% cashback. This credit has a 0% introductory APR period and a large sign-up bonus. Spend $7,500 within the first 3 months of account opening and earn $750 in cash back. 

Chase Ink Business Cash Credit Card

With the Ink Business Cash Credit Card, earn 5% cash back after you spend $25,000 on combined purchases each anniversary year at office supplies stores, internet, cable, and phone services, and 2% back after spending $25,000 each anniversary on combined purchases at restaurants and gas stations. Additionally, earn 1% on miscellaneous purchases. This card has a 0% introductory APR period and a bonus offer of $750 after you spend $7500 on purchases within the first 3 months of account opening.

American Express Blue Business Cash Card

The American Express Blue Business Cash Card has a 0% introductory APR offer and 0% introductory APR on purchases for the first 12 months of account opening. After the first 12 months of account opening, this credit card has an APR of 13.99%-21.99% variable APR. Earn 2% cash back after you spend $50,000 on eligible purchases each year and 1% after that. Each month, the cash you earn is automatically applied to your statement as a credit. Terms and rates may apply.

American Express Blue Business Plus Credit Card  

The American Express Blue Business Plus Credit Card is similar to the American Express Blue Business Cash Credit Card. It has a 0% introductory APR offer and 0% introductory APR on purchases for 12 months from the date of account opening and an APR of 13.99%-21.99% variable APR. the difference between the two credit cards is the Blue Business Plus Credit Card gives users points instead of cashback. Earn 2 points for every dollar you spend on the first $50,000 in eligible purchases each year and 1 dollar point after that. 

Best Credit Card With No Annual Fee for Small Business Owners who Travel Often

Bank of America Business Advantage Travel Rewards World Mastercard Credit Card

Best Credit Card With No Annual Fee for Small Business Owners who Have Categorical Expenses 

Bank of America Business Advantage Customized Cash Rewards Mastercard Credit Card

Chase Ink Business Unlimited Credit Card

Best Credit Card With No Annual Fee for Small Business Owners who spend more than $25,000 Yearly

Chase Ink Business Cash Credit Card

Best Credit Card With No Annual Fee for Small Business Owners who spend more than $50,000 Yearly

American Express Blue Business Cash Card

American Express Blue Business Plus Credit Card