Saturday, November 2, 2013

Now Is the Time to Launch Your Small Business

paypal, small business loan, working capital
I will be the first to admit that starting your own business can be a scary undertaking. Whether you are doing something on the side to test the waters or diving in with both feet, it is a major decision that is usually strongly influenced by your financial situation. If you can put that fear aside, you may find that there has never been a better time to either start or expand a small business.

If you are in need of financing for a new small business, bank fees may be something that are scaring you away at this point. The interest on the loan is generally low enough that the loan terms are very hard to pass up, but loan fees can take away a large enough portion of that loan to make potential business owners balk at the final terms.

The SBA has been lending money in record amounts since 2011, but much of that money has gone to those looking for more significant loans. If one were to simply look at the numbers, they could be twisted to thinking this is a good thing for the economy, but that is simply not the case. What is good for the economy is a larger amount of smaller loans being issued. In other words, $1,000,000 being split between 500 borrowers is much better than it is going to only four.

Luckily, the SBA has been paying attention and is trying to lure more potential small business owners in this market by waiving the upfront costs, a two percent fee, as well as lowering the monthly fee by .3 of a percent. This offers significant savings for business owners that have been on the fence in regard to securing financing for their new opportunity.

Existing small business owners also have a significant opportunity to create a cash influx, but it is not coming from a traditional lender. PayPal just announced a program for existing business owners to offer small business loans based on a fee instead of an interest rate, which will save the business considerable money.

These loans are being tested among PayPal's best business owners for the time being, but the early feedback is very good. Loan offers are being issued based on the business' past performance and the owner has the ability to select various payback schedules, lowering the overall fee for the higher percentage of sales being used to pay back the loan.

For example, a small business owner can accept their offer for $4,500 with a 15 percent of sales payback any have a fee of about $200. If they choose to lower the percentage of sales captured to pay back the loan, the fee would increase. If they increase the percentage, the fee would decrease. There is no payment schedule for the loan; PayPal simply deducts the agreed upon percentage of every sale until the loan plus the fee are paid back in full.

Simply put, you may never find a better time to expand or start a small business. Both the banks and PayPal have programs out there right now that are very lenient in regard to terms for securing cash funding for the business. With the holiday season here, you may not find a more attractive time to start or expand your business.

No comments: