A High Credit Score Does Not Guarantee Loan Approval for Business Owners

As the economy rebounds, small business owners are becoming more optimistic. Thriving startups as well as established businesses, however, are finding it harder and harder to obtain small business loans from traditional banks. Since 2008, overall small business lending has decreased by 15% across the board. Entrepreneurs with excellent credit and cash reserves in the bank are time and again being turned down due to banks’ reluctance to loan to smaller businesses instead of the larger corporations.

Small business loans started to become tougher to obtain in the 2009 fiscal year. Banks, skittish from massive losses incurred in the downturn, raised requirements for small business loans which made it harder than ever before for startups without years of history and lots of capital. Even as recently as October 2012, big banks awarded full loans to only 14.8% of all small business applicants.

Particularly hard hit are businesses seeking loans for less than $100,000, which are typically needed to grow a business in its initial stages. Entrepreneurs, many with pristine credit scores, tell countless stories of being turned down by dozens of banks before ultimately giving up or turning to alternative lenders. By most estimates, in major metropolitan areas small business loan applications are no longer being submitted to banks by between 50 and 60% of all regional business owners for fear of being declined.

Many small business owners have misconceptions about the loan process and particularly, the Small Business Administration (SBA). The SBA does not lend money; rather, it guarantees small business loans made by SBA lenders like traditional banks. Comparable to being approved for an FHA mortgage loan, SBA-backed loans are becoming more stringently regulated and therefore even more difficult to obtain than uninsured small business loans in some cases. SBA loans actually declined by 13% between the 2011 and 2012 fiscal years.

Additionally, many small business owners assume that because they have good credit and money in the bank they will easily be approved. Most lenders look for excellent personal credit in addition to a strong history of business credit before granting loans. Other factors like debt-to-credit ratio, gross income and the number of loan inquiries can also impact an entrepreneur’s likelihood of obtaining a business loan.

If you’ve been turned down for a small business loan or you have questions about your eligibility, contact us at 770-249-2357. Lenders like Triton Financial Solutions can bridge the gap between a small business’ need for capital and a lack of traditional funding options. Many who have been turned down by traditional banks can more easily obtain financing through non-traditional (or alternative) lenders.

La Mancha Sims is CEO of Triton Financial Solutions, a business development consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

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What Is Alternative Lending?

Many of our clients first come to us with little or no knowledge of the alternative lending industry. Most simply have a need for additional capital and have been turned down by traditional “big bank” lenders and are unaware of the many alternative lending options available on the market today. In fact, big bank lenders approved a record-low 14.8% of small business loan requests in October, 2012. As more  business owners and start-up companies become frustrated with traditional lenders and come to Triton for answers, we thought now would be a great time to answer a few questions about the steadily growing alternative lending industry.

What exactly is alternative lending?

Alternative lending is a broad term used to describe the wide range of loan options available to consumers and business owners outside of a traditional bank loan. These alternative options are most commonly used when an individual or business owner cannot obtain a traditional bank loan for any number of reasons. Alternative lenders specialize in utilizing overlooked sources of collateral such as real estate or even outstanding invoices to secure the loan. They are typically more flexible than banks when it comes to repayment schedules and loan approval and often provide cash much faster than their traditional banking counterparts. The alternative lending industry is well-established and generally staffed by well-respected members of the financial services community.

But aren’t alternative loans too expensive?

While alternative loans may sometimes have higher interest rates than traditional bank loans, they fill the gap for small businesses everywhere, providing much needed funding for cash-strapped businesses that have been unable to obtain a loan or line of credit from traditional banks, thereby giving the business owner the opportunity to invest back into the business, manage cash flow and continue to operate for years to come. Any reputable alternative lender will speak with you at length about the best loan program for your business.

What types of alternative loans are available?

There are many different types of alternative loans and several methods for collection as well. Triton Financial Solutions commonly handles business lines of credit and asset-based lending for our clients, both of which are good sources of fast, liquid capital for business owners. While business lines of credit work just like those from a traditional bank, asset-based lending uses a company’s scheduled receivables or other assets as collateral for the loan. Other types of alternative loans include medical practice loans which are designed to help grow medical practices, export loans for export businesses, and equity investment loans in which the lender purchases equity in the borrower’s business.

Triton offers a wide variety of alternative business loans including VA loans and short-term bridge loans. If you have questions about how alternative lending may work for your business, please contact our office at 770-249-2357.

La Mancha Sims is CEO of Triton Financial Solutions, a business development consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

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Business Loans for Medical Professionals

The healthcare field is one of the fastest growing industries in the United States, which means an increasing need for medical practice funding. In fact, loans to medical professionals have increased 10 times since the early 2000s. Whether you already own a practice or plan to start a practice, you have options when it comes to financing.

Types of Medical Practice Loans

Medical practice loans come in many forms, most with terms between 5 to 25 years. Fixed-interest rates on medical loans are known to be low, making it simple for most doctors to pay off their debt in a timely manner. Some lenders provide funding options for medical professionals seeking to launch a new practice, in amounts ranging from $150,000 to $1,000,000. Many of these medical startup loans have extremely low fixed-rates and graduated payments to help new doctors get started on the right financial foot.

Other Uses for Medical Practice Loans

A number of doctors obtain financing to purchase a new office building or remodel their existing practice while others simply wish to purchase new or upgraded medical equipment and have cash reserves to help with cash flow issues. Other larger loans fall under the medical umbrella when used to buy real estate for future office expansion or to purchase an existing practice. As demonstrated in the chart below from the Medical Group Management Association, practice costs are rising at a rapid rate, nearly 51% since 2001, so it makes sense that most medical professionals choose to finance at least part of their business operations at some point during their careers at a sensible rate.

Year	Practice costs	CPI	Medicare
2002	13.8%	1.6%	(5.4%)
2003	16.6%	3.9%	(3.8%)
2004	20.6%	6.7%	(2.4%)
2005	30.0%	10.3%	(0.9%)
2006	34.0%	13.8%	(0.9%)
2007	44.5%	17.1%	(0.9%)
2008	50.2%	21.6%	(0.4%)
2009	53.1%	21.1%	0.6%
2010	49.3%	23.1%	2.9%
2011	50.9%	27.6%	2.9%

Note: Practice costs have increased more quickly than the consumer price index and Medicare payment rates. These cumulative percentage changes are based on the growth or decline of practice costs based on the cost per full-time equivalent physician in 2001. Practices represent nonhospital, nonintegrated delivery service-owned multispecialty groups. Operating costs for 2011 are based on a three-year moving average projection of the previous year’s data. The CPI is based on the July semiannual figure.

Additional Options

In addition to traditional funding, many alternative lenders like Triton Financial Solutions specialize in helping doctors and private practitioners raise capital.  It is not uncommon for these alternative lenders to also offer financial services to medical professionals. These services range from debt consolidation to asset based lending, both of which helps solve most cash flow issues while adding extra profit to the practice’s bottom line. If you are looking for a way to obtain funding for your practice, speaking with an alternative lender is a good place to start and can yield great short and long-term benefits.

If you are a medical professional looking for funding or advice, call 770-249-2357 to learn more about your options. Triton provides medical financing solutions to practitioners throughout the United States and can help navigate the complicated healthcare funding laws and regulations as well as consolidate practice debt.

You can contact us with any questions or for more information.  We are also active on social media, so please visit us on Twitter, Facebook and LinkedIn.

La Mancha Sims is CEO of Triton Financial Solutions, a business development consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357.

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Small Business Loans vs. Lines of Credit: Which is Right for You?

At some point most companies face a choice over how to fund their business. Two of the most common ways to obtain business funding are through small business loans and business lines of credit. Alternative lenders like Triton Financial Solutions specialize in helping you determine which type of funding is right for your new or expanding business; below we take a look at which solution may be right for you.

What are the Specifics of a Business Loan?

Business loans are typically a one-time transfer of funds from a lender, paid back in increments over a set period of time. While both loans and lines of credit incur interest charges, the interest rates on small business loans are typically a bit higher. To offset higher interest rates, business loans usually operate via a fixed rate, meaning once you take out the loan your interest rate will remain stable. Additionally, business loans are typically paid back on a set schedule, making it easier for business owners to incorporate the payments into their monthly budget.

What Do I Need to Know about Business Lines of Credit?

Business lines of credit usually have lower interest rates than business loans. Most small businesses at some point decide to take out at least one line of credit to fund business expenses and manage unforeseen costs. While interest rates are lower, credit rates can fluctuate with the market, which makes payments more difficult to budget for. Monthly minimum payments are required but are usually less than with a small business loan.

Which is the Better Choice for My Business?

Business loans are the preferred method of funding for one-time, large capital expenses like machinery or expansion. Business owners typically put up collateral against a business loan, so often the amount of the loan and its terms are dependent upon the size of the existing business. If you are looking for a large amount of capital to be paid off in exact, specific payments, a small business loan may be best for you.

Lines of credit are a good, long-term solution for a growing business. As they are able to fluctuate with the needs of the company, business owners often turn to lines of credit when they require a flexible solution for funding the day-to-day operations of a business rather than one specific purchase. If you know you will be able to pay off your balance regularly, then a business line of credit is a solid investment for your business.

If you have questions about business loans or small business credit, contact us at contact@tritonsuccess.com to learn more.

La Mancha Sims is CEO of Triton Financial Solutions, a business development consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357. 

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The Benefits of Crowdfunding

As we have shown in prior weeks, crowdfunding or crowdsourcing has quickly become one of the newest and most discussed ways to fund an entrepreneurial venture. Due in part to the passage of the JOBS Act, crowdsourcing regulations are loosening and everyone is looking into how they can get a piece of the pie. Whether you are an established business, an optimistic startup or simply have a great idea, crowdfunding is an appealing option.

It is yet to be seen how the new regulations will affect the crowdfunding industry as it begins to develop and grow into the next big engine for business financing.  With crowdsourcing set to become the next major source of startup capital for small businesses, one thing is certain: companies that have a good strategy and a strong social media presence will likely fare better than those who simply offer a business plan. Business marketers and social media experts are poised to benefit from the surge in “pitches” expected once the specifics of the JOBS Act are settled by the Securities and Exchange Commission (SEC); these industries stand to benefit significantly from crowdfunding.

Perhaps the most exciting benefit of the crowdfunding explosion is the expected re-investment in small businesses nationwide. With this source of capital, new entrepreneurs will hopefully decide to pursue their business dreams. Companies that will provide services and products to these new businesses certainly hope the same. Alternative lenders such as Triton Financial Solutions are great options to supplement a crowdfunding campaign and amass the required startup cash.

If you have questions about how crowdfunding can work to help your business, give us a call today at 770-249-2357. We will walk you through the process and discuss all your funding options.

Anyone who has questions or would like to share pertinent information to be included in upcoming blog posts on this topic, please let us know at contact@tritonsuccess.com.

La Mancha Sims is CEO of Triton Financial Solutions, a business development consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357. 

• Visit Triton Financial Solutions Website
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Will Crowdfunding Be Your Small Business Funding Solution?

This post is the second in our continuing series focusing on crowdfunding.

Part One of this series provided details about how the JOBS Act will make it easier for small businesses to obtain financing through crowdfunding or crowdsourcing. The reduced red tape and lifted restrictions makes now the best time to take a good hard look at crowdfunding as an alternative solution for your business.

Now is the time to Get Ready:The SEC is currently working on the rules and guidelines for crowdfunding. However, what business owners can start doing now is getting a pitch ready for investors to review. If your company is a start-up, it is always a great idea to work with your local Small Business Administration (SBA) office or a business counselor to develop a business plan, which is needed to pitch your business. If you have an existing business and want to use crowdfunding to finance a growth strategy, you need to review your business and financial plan to put together your pitch.  Now is the time to work on these things so that once the guidelines are released, your company can take advantage of this great opportunity.

Crowdfunding, the Next Big Option: Alternative lenders such as Triton Financial Solutions are developing platforms that will allow start-ups and other small businesses to connect with investors, allowing them to engage one another.  Crowdfunding, once fully in place, will become the definitive way to find investors to fund all types of business ventures. Companies like Triton Financial Solutions are at the forefront in this space, and traditional funding sources may soon become the second choice for business owners seeking funding. As investors position themselves in this space in the near future, access to capital will become easier, especially for small business owners.

For more information on how to make crowdfunding work for your small business, call us today at 770-249-2357 and be sure to return  here in the weeks ahead as we continue to discuss crowdfunding in more detail and explain how investors can profit by investing in successful businesses.

Anyone who has questions or would like to share pertinent information to be included in upcoming blog posts on this topic, please let us know at contact@tritonsuccess.com.

La Mancha Sims is CEO of Triton Financial Solutions, a business development consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357. 

• Visit Triton Financial Solutions Website
• Follow Triton on Twitter
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• Send La Mancha an E-mail

How Will the JOBS Act and Crowdfunding Impact You?

This article is the first in a series addressing the recently signed JOBS Act and how small businesses are using crowdsourcing to fund their business ventures…

In April of last year, President Obama signed into law the JOBS Act (the “Jumpstart Our Business Startups Act”), a bi-partisan bill designed to make investing in small businesses easier. The rationale of the act is to ease federal regulations in order to make it easier for smaller companies to obtain funding.

With over 565,000 startups launched per month in the US, each averaging a first-year investment of around $78,000, reports of the JOBS Act’s passage was welcome news to many entrepreneurs. That is not to say, however, that beneficiaries of the law won’t have to meet some very specific requirements to qualify. Since the law will not fully go into effect until at least January of 2013, there is still time for small business owners to prepare to use crowdfunding as an alternative source of funding.

The overall purpose of the JOBS Act is to ease red tape, making it simpler and easier for smaller firms to raise funds through a process known as “crowdsourcing,” or “crowdfunding.” Crowdsourcing is a method of raising capital from small investors who in turn receive a stake in the business. This provides investors an easy, low-cost way to participate in a company without forcing the business to go through the rigors of an Initial Public Offering (IPO) or to meet other outdated government regulations.

Under the JOBS Act all money that is crowdsourced must first go through a third-party, Securities and Exchange Commission (SEC)-registered broker or website “portal” to help manage the risks for these type of investments. Currently, many of the most popular crowdfunding services are web-based (such as IndieGoGo and Kiva) but alternative lenders like Triton Financial Solutions have also entered the crowdsourcing arena with the passage of the JOBS Act.

The JOBS Act excludes companies with earnings over $1 billion a year from participating and caps the amount that can be raised by any one company at $1 million annually. Investors, those “crowdsourcing” the business, may contribute no more than 5% of their income if they make less than $100,000 a year. Individuals making over $100,000 a year are allowed to contribute no more than 10%. These regulations attempt to mitigate the risk smaller investors assume when investing. The SEC is currently writing the bylaws to support this new law and to define the parameters under which this law will be governed.

With over 75% of new jobs in the US being created by small businesses annually, the impact could be striking. The JOBS Act creates the perfect opportunity for would-be entrepreneurs to start a new business and get much needed funding.

If you would like more information about how the JOBS Act could impact your small business or your investment options, contact Triton today to talk to an experienced alternative lender, and return here over the next few weeks as we analyze what the JOBS Act and crowdfunding mean for you and your business in a series of upcoming articles.

Anyone who has questions or would like to share pertinent information to be included in upcoming blogs on this topic, please let us know at contact@tritonsuccess.com or call 770-249-2357.

La Mancha Sims is CEO of Triton Financial Solutions, a business development consulting firm located in Atlanta, Georgia. You can reach La Mancha at 770-249-2357. 

• Visit Triton Financial Solutions Website
• Follow Triton on Twitter
• Like Triton on Facebook
• Send La Mancha an E-mail