Popular Types of Business Loans for Small Businesses

Every business encounters major challenges in the cash flow at some point, which may necessitate borrowing of funds in order to sustain business operations. For startups, financial difficulties may come knocking at the door early on.

Fortunately, small businesses that find it difficult to finance all their projects have a number of avenues to turn to for support. Finding a lender is not as tedious as it used to be, and the choices are more numerous today. There are bank loans and merchant service providers. Some loan packages are offered by government agencies, which attract many borrowers since they come with guarantees other lenders cannot provide. Loans come in all forms and sizes, and some are tailor-fit to meet the specific needs of the lender. The availability of more than one option is an indicator that business owners must evaluate their needs first in order to ascertain that a specific type of loan is indeed the best recourse given their current situation.

Short-term Vs. Long-term

Two basic types of loans available to small business owners are long-term loans and short-term loans. Long-established commercial lenders usually offer long-term loans that have low interest rates. The amount of money is large enough to cover huge expense, such as additional capital needed in business acquisition and related activities. Small businesses looking for working capital can approach these lenders, and they usually get approval if they have a formidable business plan.

Meanwhile, short-term loans are usually issued by credit unions and banking institutions. Whereas a long-term loan must be paid on a monthly basis, short-term loans are paid at the end of the term of the agreement. The interest rate is usually higher compared to short-term loans. Retailer looking for additional funding for a short project that is expected to provide huge profits in a brief time period can benefit much from this type of loan.

Alternative options

Aside from conventional sources of funding, borrowers may opt to avail of alternative lending offers, such as those offered by online merchants. Applying for a business loan is now quite convenient since every step of the process can be conducted online. These offers are also quicker to process. It is possible to access capital without the difficulty posed by traditional procedures requiring mounds of paperwork. Alternative financing options work best for use in meeting the needs of an expansion, or sustaining operations when there are cash shortfalls.

Small businesses that are in the early stages of operation often find it difficult to meet stringent requirements. Alternative lending methods are relatively more flexible, including cash advances, crowd funding, and peer-to-peer loans, among others. For small businesses, it is often easier and faster to secure financing using alternative means. Many business owners opt for alternative financing methods especially when they have urgent need for the money. There are situations where the time frame is critical because availability of funds determine whether the company’s daily operations can continue or not.

It is not that difficult even for startups to get approval for a loan if they have a good credit score and a positive cash flow as well.

Internet Marketing–Various Online Business Models

There are many different methods of making an online income. In reality, they are all very similar to the business models you see in the offline world. You can sell goods and services, you can produce products for wholesale distribution, you can sell information, you can sell tools to help people in their own business model, you can sell advertising, or you can provide consulting services.

Do you see a common theme in all of these models? That’s right—to have a viable business, you have to literally provide some kind of a good or service that adds value to someone or something, either online or offline.

I think that when people think about going into business offline, they look for a need in their community and try to fill it. Online, they tend to think, OK, what can I do to make a lot of money? There is a huge difference between the two. Online, I think people really believe that if they put up a web site and sell something, the money will just come in. It is simply not an accurate thought, but I think that just about everybody has thought it at one time or another.

So to create an income online, you must meet a need, just like you would in the offline world. You meet that need by producing, developing, distributing, or brokering a product or service. That is just about it. You will never earn long-term viable income from schemes and scams, no more than a bank robber will earn a long-term viable income robbing banks.

Here are some of the basic business models you can find on the web:

1) Production model. This is a company that produces value by transforming one good into another for online consumption. An offline equivalent would be a shoemaker or a gold mining firm. The online equivalent might be the development of new software or search technology, or the development of online technology that aids in the execution of some of the other online business models.

2) Merchant model. This is a company that specializes in the sales and organizes the delivery of goods and services to an online market. This can be compared to the offline equivalent of a merchant. Some examples online are bookstores, food stores, catalog web sites and other goods and services sales organizations.

3) Advertising model. This is a company that specializes in providing the service of advertising or promotion to other online firms, for example, those firms that operate using the production or merchant model. This model charges these companies a fee to advertise the goods and services provided by the other online business models.

4) Affiliate model. This is a model that resembles the advertising model, but is different in that it focuses on recruiting many individual companies or individuals to do the advertising in a systematic and piecemeal way. Whereas in the advertising model, the advertiser is paid based on the amount of advertising distributed, the affiliate model pays the affiliate marketer when a sale or step in a sales process is completed. This step may be an online visit, a request for more information, or the actual sale itself.

5) Brokerage model. This model is one that compensates the broker for bringing together buyer and seller, usually in the form of a personal, one-on-one introduction. An example of this might be an online auction or a processor of online payments.

6) Information model. The information business model is one in which the company provides information to a specific field or niche market. This information would typically instruct another company or individual on an easier or more efficient method of performing a task, or actually teach the task or the implementation of the task.

7) Subscription model. This is an overlay model, one which is generally incorporated into one of the other models. This model would provide a good or service over a protracted period of time, and provide a guaranteed and generally consistent level of that good or service for a period of time, for example over the course of several months. Two products that fit into this subscription model might be that of online monthly video rentals or services like food or medicines which are delivered on a regular basis by commitment.

8) Utility model. This model operates in much the same way as an offline utility might operate, offering a product that has, through its use, become a necessity and is often tightly controlled. An example of an online utility model would be that of internet access or telephone service via an online network.

9) Community model. This is a business model that focuses on bringing together individuals or companies of similar interest for the purpose of developing relationships and sharing information. Two examples of the community web phenomenon are the recently created Myspace and the older online forum.

When deciding to go into business online, it is important to determine which of these business models most interest you. To which of these models are you best suited? In which of these models are you most likely to be considered an expert, or in which would you have the willingness to become an expert?

Are You Losing Business by Only Accepting Cash and Checks?

Many mobile business owners and professionals struggle with payment options. While on the road, moving from one job site (or client) to the next, it can be difficult to keep things organized. Most small business owners have the luxury of a storefront, cash register, and credit card processing terminal. For them, there’s no guesswork or potential “run-around” involved – either the card has funds, or it doesn’t.

Mobile business owners, such as landscapers, trades people, merchants at craft fairs, and others simply do not have these luxuries. Most are limited to accepting cash or check; the latter with no guarantee that there are funds in the account. It can be difficult for them to find a payment method that is convenient for both them and their customer, especially for big-ticket items. Unfortunately, this may often mean that the sale goes instead to the brick and mortar merchant, simply because they accept credit cards and/or provide a financing option that doesn’t involve some sort of collection arrangement.

(In other words, the credit card company acts as the “creditor” for them, in a sense, and gives the customer a self-directed financing plan on their own terms.)

Are you losing sales because you don’t or can’t accept credit cards? This is a problem shared by many mobile business owners. Imagine the sales you might have had at your last trade show or job fair, if payment of a large sum had been easier and more convenient for your customer.

Customers are carrying less and less cash around. We are quickly becoming a plastic consumer society and few people like to bother any longer with the hassle of cash or check books. They prefer the ease and convenience of their credit or debit cards. Are you losing valuable sales because you don’t accept this most convenient method of payment?

Many business owners also prefer credit cards. They offer the advantage instant approval. There is no waiting for days for a check to clear and money to be deposited in your account. Credit cards provide 24-hour payment in a 24-hour world. Payments can be processed quickly, on demand.

What if there was a way for you to accept credit cards from your mobile office or job site? This would enable you to build your business from anywhere, any time. Why should brick and mortar businesses get all the customers?

What would this do for your business? Your business could potentially grow by leaps and bounds – and you’d be making life a lot easier for both your customers, and yourself.

Here’s the good news – you do, in fact, have options. Here are two solutions you should consider:

1. Use a Wireless Credit Card Terminal.

If your typical business day consists of a large number of smaller sized transactions (for example, a pizza delivery business with an average of 40 sales under $30 a day), then you should seriously consider getting a wireless credit card processing machine.

Your monthly fees for the merchant account (and equipment, if leasing) will be average, as will the discount rate per sale, but the convenience factor in addition to the potential increase in sales from customers who don’t necessarily have cash on hand will likely more than make up for the monthly fees, and then some.

2. Accept Credit Cards by Phone

Now, if you run a business where you’re only closing on a few sales a day, but at a higher ticket ($x00 – $x,000), then you’ll want to minimize your merchant account costs because your credit card transactions will be more of an occasional occurrence – even though it will certainly impact your business in regards to convenience, efficiency and potentially even sales.

For example, if you own a landscape business where the average transaction is $600, you’ll find that quite a few clients will want to take advantage of either their card’s built-in rewards points (like “air miles”), the flexible financing – or in most cases, both of these added benefits combined.

The benefit for you is that credit doesn’t “bounce” and in most cases, you’ll have access to the funds much faster than with a check.

Now, here’s the best part – you can accept credit card payments on the spot from any touch-tone phone, including your cellular.

Also, the leading “pay by phone” services available have very low monthly fees and operate in more of a “pay as you go” fashion.

This is the perfect solution for a mobile business – or professional – where occasional credit card transactions are necessary (and profitable), but don’t quite warrant the hassle of using a traditional terminal.

Some services cost as little as a few bucks a month at about 4% per sale.

So there you have it – two very viable options for mobile business types that would otherwise have to remain stuck in the “dark ages” of cash and check payments.

Do your due-diligence to see what service might be best for you and your customers.