A Single Woman’s Guide to Buying Her First Home

home

There was once a point in time when a single woman buying a home was unthinkable, and women sometimes would even face discrimination if they showed up at an open house without a mate. Today’s first-time homebuyer challenges for single women include uphill battles to prove credit-worthiness after a divorce or getting the same deal as a single male who, because of widespread pay inequalities, is paid more, thus opening him up to access to better loans.

Despite these challenges, today’s single woman is empowered and investing in her own slice of the American dream. A recent survey by the National Association of Realtors reflects that single women comprised more of the homebuyers’ group in 2016 than in recent years. According to the NAR Profile of Home Buyers and Seller Survey findings, married couples still make up a large share, however, single females represented 17% of total purchases of homes, the highest rate since 2011.

If you’re hoping to buy a home and have decided not to wait for marriage, here are three steps to get you started on the right track:

 

1. Get to know your options and what you can feasibly afford. 

 

This is usually done in the pre-qualification process. According to Realtor.com’s Craig Donofrio, pre-qualification gives you a sense of “how much house you can afford,” and it’s a conversation you have with a loan officer about your current financial picture. Don’t be afraid to explore this. You won’t know what’s feasible if you don’t actually take the step to talk to someone. Don’t let hang-ups about being single stop you from exploring what it will take to buy a home. Also, if you’re not yet in the position to buy, you can create a plan, based on information from your conversation, to become ready to buy.

 

2. Invest time in courses, first-time buyer programs, and support groups.

 

Many financial institutions, nonprofits, and local government offices offer free resources for prospective homebuyers to learn more about the process, prep themselves for being attractive candidates for loans, or help them through the process with moral and informational support. It can be as simple as conducting a Google search for “homeownership classes,” and you’ll find many local resources based on your location. Also, if you’re already banking with an institution, tap into their free resources by meeting with a representative to find out about local events and panels on the subject. Oftentimes there are grants, down-payment assistance, and other tailored resources specific to first-time homebuyers who complete courses and programs.

 

3. Save, save, and save some more. 

 

As a single woman applying for loans or seeking ways to finance your home, it can be challenging when there’s only one income and one person’s assets to consider. Experts have touted the benefits of having more money to put toward a down payment, from easier approval experience to lower interest rates, and even if you decide not to use that full “Dream Home Fund” for the down payment, you’ll definitely be glad to have funds to cover expenses such as mortgage insurance, home inspections, cash reserves (which some lenders require), and moving expenses. Be deliberate in saving up as much as you can.

[Entrepreneur of the Week] Here’s How Ginjan Bros Won $25,000—You Can Too

Here’s a chance to share your story about your small business and win a cash prize. FedEx is launching its fifth annual Small Business Grant contest, and it has begun accepting entries for a total prize pool of $120,500—the largest sum since the contest’s inception. For the first time this year, the winners will also receive an additional dollar amount in credit to use towards FedEx Office print and business services, in conjunction with the cash prize.

 

What You Could Win

 

The awards for FedEx’s Small Business Grant contest include:

  • One grand prize of $25,000, plus $7,500 in FedEx Office print and business services.
  • One runner-up will receive $15,000, plus $5,000 in FedEx Office print and business services.
  • Eight winners will each get $7,500, plus $1,000 in FedEx Office print and business services.

 

How to Enter the Contest

 

The 2017 FedEx Small Business Grant contest is open to U.S.-based, forprofit, small businesses with fewer than 99 employees that’s been in operation for six months or more. To enter, participants must visit FedEx’s site and enter their contact information, write a short profile about their business, and upload four photos of their business or product, including their logo.

The number of votes, social media presence, how you are impacting the community, as well as the uniqueness and innovativeness of your business is what FedEx is looking for from applicants, so be sure to have a compelling story. Also, while not required, participants have the option of submitting a 90-second “elevator speech” video to supplement their entry.

The entry period is from February 21 to March 29, 2017, with voting taking place from March 1 to April 5, 2017.

 

How the Contest Has Helped Small Businesses Grow

 

Over the past four years, the contest has now grown from one country to nine countries. What’s more, 13,000 businesses have entered the contest in the U.S. alone, and the grant pool for the U.S. contest has grown from $50,000 to more than $120,000 in total prizes.

While most people may see FedEx and think “big business,” FedEx’s Camille Washington reminds us that FedEx Founder Fred Smith started the company as a small business, which has grown into this mega-organization. “But, he has not forgotten the heartbeat of the economy which is small businesses,” explains Washington, manager of Integrated Go-To-Market at FedEx Services. “So, the grant is just one small way that we try to show our support and commitment to small business.”

Since inception, the grant has helped approximately 40 U.S. entrepreneurs take their business to the next level. “Our goal is to get with these small businesses early in their life cycle, so that we can help them grow,” says Washington. She cites the very first grand prize winner, Nicole Snow, founder and CEO of Darn Good Yarn, “which has grown substantially by leveraging our network and services.”

 

Entrepreneurs Living the American Dream

 

Through the $25,000 grant, last year’s grand prize winner Ginjan Bros., a Harlem-based small business that produces and bottles organically produced, non-GMO African beverages, was able to ramp up production, both to fill their current orders and produce enough inventory to support expanded distribution. They also put a portion of the cash prize toward securing organic and GMO-free production certifications.

Ginjan Bros. is run by two siblings, Mohammed and Ibrahima (Rahim) Diallo, who are originally from West Africa (Conakry, Guinea), but now, are living the American dream. Using a recipe from their mother that they tweaked, the brothers have created a homemade drink inspired by their motherland.

“Ginger drink is something that we drink a lot of back home, but we could never get a good quality [beverage] here,” says Mohammed.

“I have always had an entrepreneurial mindset,” adds Rahim. “This was a lane that we felt needed improvement.”

Now that Ginjan Bros. knows about the resources FedEx offers to help small businesses with packaging and logistics, the company has lplans in the works to expand its e-commerce business.

For more on Ginjan Bros.’ journey to winning the 2016 FedEx Small Business Grant contest, click here.

 



[Entrepreneur of the Week] Here’s How Ginjan Bros Won $25,000—You Can Too

Here’s a chance to share your story about your small business and win a cash prize. FedEx is launching its fifth annual Small Business Grant contest, and it has begun accepting entries for a total prize pool of $120,500—the largest sum since the contest’s inception. For the first time this year, the winners will also receive an additional dollar amount in credit to use towards FedEx Office print and business services, in conjunction with the cash prize.

 

What You Could Win

 

The awards for FedEx’s Small Business Grant contest include:

  • One grand prize of $25,000, plus $7,500 in FedEx Office print and business services.
  • One runner-up will receive $15,000, plus $5,000 in FedEx Office print and business services.
  • Eight winners will each get $7,500, plus $1,000 in FedEx Office print and business services.

 

How to Enter the Contest

 

The 2017 FedEx Small Business Grant contest is open to U.S.-based, forprofit, small businesses with fewer than 99 employees that’s been in operation for six months or more. To enter, participants must visit FedEx’s site and enter their contact information, write a short profile about their business, and upload four photos of their business or product, including their logo.

The number of votes, social media presence, how you are impacting the community, as well as the uniqueness and innovativeness of your business is what FedEx is looking for from applicants, so be sure to have a compelling story. Also, while not required, participants have the option of submitting a 90-second “elevator speech” video to supplement their entry.

The entry period is from February 21 to March 29, 2017, with voting taking place from March 1 to April 5, 2017.

 

How the Contest Has Helped Small Businesses Grow

 

Over the past four years, the contest has now grown from one country to nine countries. What’s more, 13,000 businesses have entered the contest in the U.S. alone, and the grant pool for the U.S. contest has grown from $50,000 to more than $120,000 in total prizes.

While most people may see FedEx and think “big business,” FedEx’s Camille Washington reminds us that FedEx Founder Fred Smith started the company as a small business, which has grown into this mega-organization. “But, he has not forgotten the heartbeat of the economy which is small businesses,” explains Washington, manager of Integrated Go-To-Market at FedEx Services. “So, the grant is just one small way that we try to show our support and commitment to small business.”

Since inception, the grant has helped approximately 40 U.S. entrepreneurs take their business to the next level. “Our goal is to get with these small businesses early in their life cycle, so that we can help them grow,” says Washington. She cites the very first grand prize winner, Nicole Snow, founder and CEO of Darn Good Yarn, “which has grown substantially by leveraging our network and services.”

 

Entrepreneurs Living the American Dream

 

Through the $25,000 grant, last year’s grand prize winner Ginjan Bros., a Harlem-based small business that produces and bottles organically produced, non-GMO African beverages, was able to ramp up production, both to fill their current orders and produce enough inventory to support expanded distribution. They also put a portion of the cash prize toward securing organic and GMO-free production certifications.

Ginjan Bros. is run by two siblings, Mohammed and Ibrahima (Rahim) Diallo, who are originally from West Africa (Conakry, Guinea), but now, are living the American dream. Using a recipe from their mother that they tweaked, the brothers have created a homemade drink inspired by their motherland.

“Ginger drink is something that we drink a lot of back home, but we could never get a good quality [beverage] here,” says Mohammed.

“I have always had an entrepreneurial mindset,” adds Rahim. “This was a lane that we felt needed improvement.”

Now that Ginjan Bros. knows about the resources FedEx offers to help small businesses with packaging and logistics, the company has lplans in the works to expand its e-commerce business.

For more on Ginjan Bros.’ journey to winning the 2016 FedEx Small Business Grant contest, click here.

 



How Microlending Can Help You Start A Business

microlending

If you want to start a business, you’ve probably thought of using your savings, asking friends and family for help, putting expenses on your credit card, and applying for a traditional bank loan. The first two options work well, provided you’ve got a little socked away and your nearest and dearest believe in your dreams as much as you do. The third could put your personal credit in serious jeopardy, not to mention racking up some crazy interest charges. The fourth, traditional bank loans, aren’t always easy to come when you’re an entrepreneur (perhaps surprisingly). That’s where microloans come into the picture. Read on to learn more about how microlenders can help you get that $10,000 or $20,000 you need to cover your costs to get your business going.

 

How Do Microloans Work?

 

If you’re in the early stages of funding your business, you can borrow up to $35,000-50,000 from a small, community-based nonprofit organization called a microlender. These work with the SBA (Small Business Association), and there are about 160 of them throughout the country. Think of them as intermediaries monitored by the SBA. Of course, there are also microlenders who receive their funding from state or local governments instead of the SBA, and still others who operate through philanthropies. You can search for one based on your geographic area or other criteria specific to your business. Once you have a microloan, which has a short time period and a low interest rate, you’re ready to take care of those startup expenses and start profiting so you can pay back the loan. Even those who need just a little capital or who have a limited credit history are eligible to apply–in fact, those descriptions apply to most of those who choose microloans in the first place.

 

How Do I Get Started?

 

Start by determining what your expenses are going to be. You may want to sit down with an accountant so that they can look at your business plan and help you project costs during the initial startup period. Once you know how much money you’ll need, it’s important to ensure that your projected profits will allow you to make monthly payments on the loan. Even if you don’t want to work with an accountant, you do need to create a business plan using a template. Then you’ll need to begin searching for the microlender that’s right for you. You can find one in your local area by talking to other business owners or business groups, and you can also check with the SBA’s microlending directory online. Be prepared to put up collateral, like your car or home, and to invest some of your own money. For most lenders, you’ll need a decent credit score–anything under 575 probably won’t cut it.

 

What Should I Look for in a Microloan?

 

You’ll want to make sure that the microloan you sign doesn’t require the microlender to sign off on every single business decision you make. While they deserve to understand your business plan and to be paid in a timely fashion, the way you run your business should ultimately be up to you. Of course, the interest rate should be significantly lower than you would expect from a credit card–think under 12%. You also need to weigh the risks and benefits of signing before you actually put ink to paper. If you’re not able to pay back the loan, you might very well have to file for bankruptcy to save your collateral, which will destroy your credit score for years. Microloans can be a fantastic option for the business savvy; just don’t bite off more than you can chew.


 

Jay Z Launches Venture Capital Fund to Invest in Startups

Jay Z

Jay Z is launching a new venture capital fund according to a news report from Axios. Reportedly, Jay Z (Shawn Carter), will partner with the venture capital firm Sherpa Capital, which has invested in companies like Uber, Airbnb, and Slack. He also will partner with Jay Brown, a longtime business partner and president of Roc Nation. The fund is expected to focus on seed-stage funding of tech startups, which is similar to what the duo have been supporting for about five years as angel investors.

One of Jay Z’s most successful investments to date is his participation in Uber’s 2011 Series B funding round, when it was valued at just $300 million. Uber’s valuation has since ballooned to $66 billion, reports CNBC. He’s made several high-profile seed investments in technology startups over the last few years through his entertainment company Roc Nation, such as the private jet rental company BlackJet and French audio equipment company Devialet, reports Crunchbase. Jay Z has separately invested in various entities, including the NBA’s Nets.

Tidal’s $200 Million Price Tag

 

It is worth noting that Jay Z has profited from his business ventures. Tidal is the Scandinavian streaming service that he purchased for $56 million two years ago. While Tidal, according to news reports reveals, appears to be struggling to compete against chief rivals like Spotify, which has already topped 40 million paying subscribers compared to Tidal’s 3 million, Sprint recently agreed to acquire 33% of Tidal for about $200 million in early January.

Other Celebrity Investors

 

Jay Z joins the ranks of other celebrities-turned-tech investors that have started venture capital funds. Through his venture fund QueensBridge Venture Partners, Nasir bin Olu Dara Jones, better known by his rapper persona and stage name Nas, has backed more than 40 startups across a range of sectors, like financial technology, health care, and music production.

He may not be a household name, but American music manager Troy Carter is the founder, chairman, and CEO of Atom Factory, a talent management and production company, with clients including Meghan Trainor and John Legend. He also is the former manager of Lady Gaga and has made appearances on the ABC’s Shark Tank. Carter has invested in over 30 startups and launched Crosse Cultures Ventures, a venture capital fund that invests in entrepreneurs creating next generation technology and consumer products—eight of those portfolio companies are led by black men.

Nine-time NBA all-star Carmelo Anthony teamed up with businessman Stuart Goldfarb to launch Melo7 Tech Partners, a venture capital firm that has invested in companies including Lyft, SeatGeek, and Whistle—a GPS tracker that you put on your pet. He’s joined by former NBA Lakers all-time MVP Kobe Bryant. After his retirement, Bryant announced the launch of a $100 million venture capital fund.

 

‘Shark Tank’ Celebrates $100 Million in Deals Done on the Show

shark tank

In a special episode featuring millennial entrepreneurs, one will make the deal that will take the ABC award-winning show Shark Tank across the $100 million threshold in deals made since the show first aired in August 2009. Since then, more than 600 entrepreneurs have pitched their businesses in the Tank, in hopes that they will come closer to attaining the American Dream. Shark Tank has given people from all walks of life the opportunity to secure business deals that could make them millionaires.

 

The Road to $100 Million

 

ABC’s 20/20 will take a closer look at the entrepreneurs behind the $100 million in deals over the last eight seasons.  The two-hour program, Shark Tank: The Road to $100 Million, will air February 29, at 9:00 p.m., on ABC. Anchors Elizabeth Vargas and David Muir interview America’s favorite sharks–Mark Cuban, Kevin O’Leary, Barbara Corcoran, Daymond John, Robert Herjavec, and Lori Greiner–about the most successful investments and the biggest misses in show history.

The show examines some of the Shark Tank products made in America, and the entrepreneurs behind them, who brought jobs to small towns nationwide.  Plus, the cast talks about the “kidpreneurs” that got their start on Shark Tank, and where they are now. The Sharks also take viewers behind the scenes, revealing how competitive they really are with one another when the cameras aren’t rolling, and their favorite memories from the show.

 

Black Entrepreneurs Shine on Shark Tank

 

Since the beginning, black entrepreneurs have shined on Shark Tank. Mr. Tod’s Pie Factory struck a deal with Barbara Corcoran and Daymond John on the first episode, with a near $1 million valuation. In the seventh season, entrepreneurs like Sarah Ribner of Piper Wai, and Ben Young and Gregory Coleman of Nexercise, continued to inspire on Friday nights. Nexercise’s $18.7 million valuation is the largest to date on Shark Tank.

Related Story: Expect to See More Black Entrepreneurs on ‘Shark Tank’ Season 8

Since 2015, Joshua DuBois and Brandon Andrews of Values Partnerships have been working to ensure the voices pitching on Shark Tank reflect the diversity of audiences watching it. With the support of executive producer Mark Burnett, Values Partnerships–a Washington, D.C., based firm engaging faith-based and diverse communities worldwide–has held nationwide casting calls to bring more diverse ideas and entrepreneurs to the show.

“ABC’s Shark Tank and Mark Burnett are committed to supporting entrepreneurs from every community in the nation. The power of seeing someone who looks like you successfully pitch a business on the show cannot be understated,” DuBois told BlackEnterprise.com.

“Our first goal is always to get more entrepreneurs on the show. Second, is finding ways to empower entrepreneurs across the nation,” adds Andrews, who will serve on a panel about pitching for capital and competing for grants at the 22nd annual Black Enterprise Entrepreneurs Summit, May 17-20, 2017, in Houston.

‘Shark Tank’ Celebrates $100 Million in Deals Done on the Show

shark tank

In a special episode featuring millennial entrepreneurs, one will make the deal that will take the ABC award-winning show Shark Tank across the $100 million threshold in deals made since the show first aired in August 2009. Since then, more than 600 entrepreneurs have pitched their businesses in the Tank, in hopes that they will come closer to attaining the American Dream. Shark Tank has given people from all walks of life the opportunity to secure business deals that could make them millionaires.

 

The Road to $100 Million

 

ABC’s 20/20 will take a closer look at the entrepreneurs behind the $100 million in deals over the last eight seasons.  The two-hour program, Shark Tank: The Road to $100 Million, will air February 29, at 9:00 p.m., on ABC. Anchors Elizabeth Vargas and David Muir interview America’s favorite sharks–Mark Cuban, Kevin O’Leary, Barbara Corcoran, Daymond John, Robert Herjavec, and Lori Greiner–about the most successful investments and the biggest misses in show history.

The show examines some of the Shark Tank products made in America, and the entrepreneurs behind them, who brought jobs to small towns nationwide.  Plus, the cast talks about the “kidpreneurs” that got their start on Shark Tank, and where they are now. The Sharks also take viewers behind the scenes, revealing how competitive they really are with one another when the cameras aren’t rolling, and their favorite memories from the show.

 

Black Entrepreneurs Shine on Shark Tank

 

Since the beginning, black entrepreneurs have shined on Shark Tank. Mr. Tod’s Pie Factory struck a deal with Barbara Corcoran and Daymond John on the first episode, with a near $1 million valuation. In the seventh season, entrepreneurs like Sarah Ribner of Piper Wai, and Ben Young and Gregory Coleman of Nexercise, continued to inspire on Friday nights. Nexercise’s $18.7 million valuation is the largest to date on Shark Tank.

Related Story: Expect to See More Black Entrepreneurs on ‘Shark Tank’ Season 8

Since 2015, Joshua DuBois and Brandon Andrews of Values Partnerships have been working to ensure the voices pitching on Shark Tank reflect the diversity of audiences watching it. With the support of executive producer Mark Burnett, Values Partnerships–a Washington, D.C., based firm engaging faith-based and diverse communities worldwide–has held nationwide casting calls to bring more diverse ideas and entrepreneurs to the show.

“ABC’s Shark Tank and Mark Burnett are committed to supporting entrepreneurs from every community in the nation. The power of seeing someone who looks like you successfully pitch a business on the show cannot be understated,” DuBois told BlackEnterprise.com.

“Our first goal is always to get more entrepreneurs on the show. Second, is finding ways to empower entrepreneurs across the nation,” adds Andrews, who will serve on a panel about pitching for capital and competing for grants at the 22nd annual Black Enterprise Entrepreneurs Summit, May 17-20, 2017, in Houston.

Here’s a Chance to Win $10,000 for Your Small Business

small business

Is your business pitch on point? Need capital infusion? The 22nd annual Black Enterprise Entrepreneurs Summit has officially opened its highly anticipated Elevator Pitch Competition and is ready for submissions.

Inventors and entrepreneurs across the country have a chance to $10,000 at the 2017 Entrepreneurs Summit, which is set to take place May 17-20, at the new Marriott Marquis Houston. If you have been eagerly waiting on the space or opportunity to pitch your awesomely innovative and creative business, product, or service, to decisions-makers that know just how to make things happen, here’s your chance! With less than 1% of venture capital and angel dollars from majority investors funding minority businesses, the Elevator Pitch offers the opportunity to get in front of funders, who are seeking black founders with great products and services in need of capital to grow and scale their businesses.

 

Win $10,000 in Two Minutes or Less

 

Get your pitch down to two minutes or less, then email Black Enterprise with a YouTube video submission of you pitching your product or service.

Please, be sure to include your name, e-mail, and phone number. In the subject line, write: 2017 BE Elevator Pitch Competition. Then, sit back and watch your future unfold.

Related Story: How to Come Out a Victor at Elevator Pitch Competitions

There will be 10 semi-finalists selected from these submissions. If you’re selected as a semi-finalist, you’re then granted the opportunity to pitch to a panel of expert judges. From those 10 semi-finalists, the top-three finalists will be selected to pitch again—this time, with a curtailed, 30-second time limit in front of business experts, investors, and a live audience, for the chance to win a $10,000 cash prize and coaching.

Some words of wisdom, when pitching for potential investors is to always come prepared, and know all of the reasons why one would want to purchase your product, in addition to understanding the demographic to which you will be selling the product too. Make your product dance!

 

Six Pitch Perfect Things You Need to Know:

 

  1. Prepare an introduction about who you are and who your team members are.
  2. Share information about your market and your competitors—everyone has someone.
  3. Explain what product, service, or technology you are offering, as well as the problem or pain you are solving, and your solution.
  4. Discuss your business model and how it will you make money.
  5. Show how are you going to acquire new customers and keep any existing customers happy.
  6. Breakdown what will you use the money for, or how it will help your business grow.

The ball is totally in your court. If you’ve ever watched Shark Tank and said to yourself, “If that was me, I’d knock it out of the park,” this is the competition for you.

Related Story: How I Won The Black Enterprise Elevator Pitch Competition

Here’s a Chance to Win $10,000 for Your Small Business

small business

Is your business pitch on point? Need capital infusion? The 22nd annual Black Enterprise Entrepreneurs Summit has officially opened its highly anticipated Elevator Pitch Competition and is ready for submissions.

Inventors and entrepreneurs across the country have a chance to $10,000 at the 2017 Entrepreneurs Summit, which is set to take place May 17-20, at the new Marriott Marquis Houston. If you have been eagerly waiting on the space or opportunity to pitch your awesomely innovative and creative business, product, or service, to decisions-makers that know just how to make things happen, here’s your chance! With less than 1% of venture capital and angel dollars from majority investors funding minority businesses, the Elevator Pitch offers the opportunity to get in front of funders, who are seeking black founders with great products and services in need of capital to grow and scale their businesses.

 

Win $10,000 in Two Minutes or Less

 

Get your pitch down to two minutes or less, then email Black Enterprise with a YouTube video submission of you pitching your product or service.

Please, be sure to include your name, e-mail, and phone number. In the subject line, write: 2017 BE Elevator Pitch Competition. Then, sit back and watch your future unfold.

Related Story: How to Come Out a Victor at Elevator Pitch Competitions

There will be 10 semi-finalists selected from these submissions. If you’re selected as a semi-finalist, you’re then granted the opportunity to pitch to a panel of expert judges. From those 10 semi-finalists, the top-three finalists will be selected to pitch again—this time, with a curtailed, 30-second time limit in front of business experts, investors, and a live audience, for the chance to win a $10,000 cash prize and coaching.

Some words of wisdom, when pitching for potential investors is to always come prepared, and know all of the reasons why one would want to purchase your product, in addition to understanding the demographic to which you will be selling the product too. Make your product dance!

 

Six Pitch Perfect Things You Need to Know:

 

  1. Prepare an introduction about who you are and who your team members are.
  2. Share information about your market and your competitors—everyone has someone.
  3. Explain what product, service, or technology you are offering, as well as the problem or pain you are solving, and your solution.
  4. Discuss your business model and how it will you make money.
  5. Show how are you going to acquire new customers and keep any existing customers happy.
  6. Breakdown what will you use the money for, or how it will help your business grow.

The ball is totally in your court. If you’ve ever watched Shark Tank and said to yourself, “If that was me, I’d knock it out of the park,” this is the competition for you.

Related Story: How I Won The Black Enterprise Elevator Pitch Competition

4 Hurdles to Overcome When Applying for a Small Business Loan

small business loan

Very few businesses are able to successfully get off the ground without some form of financing. With so many financing options available, it’s often difficult to know which route is best for your business. Small business loans are often enticing as they are generally quick to obtain. However, a small business loan comes with contingencies that may come back to haunt you down the road.

If you’re considering a small business loan to finance your business, take note of these four obstacles associated with this form of financing.

1. Piles of Paperwork

 

Traditional small business loans from banks and other institutionalized lenders will often require vast amounts of documentation. These lenders will often ask for your tax returns, credit reports, legal documents, bank statements, business plans, and sometimes your personal credit history.

The SBA does a great job in outlining the necessary documents you’ll need to provide your lender. Make sure you’re as thorough as possible when providing this information, since banks tend to be very specific.

2. Credit Score Checks

 

When you apply for a small business loan, the lenders will almost always check your credit score. They will typically look at both your personal credit history as well as any applicable business credit history. Since most small businesses lack sufficient credit history the banks will rely on personal credit checks to grant the loan.

If you’ve struggled with personal credit in the past, you will likely get an unfavorable interest rate, if you’re even given the loan at all. With plenty of other financing options available, I’d strongly recommend considering another option, if faced with a high-interest rate. In the early stages of any business, a high-interest rate can severely hurt your cash flow, when you need to be putting cash back in your business.

3. Personal Liabilities

 

Oftentimes, lenders will ask for personal guarantees or collateral when applying for a small business loan. Small businesses typically lack necessary assets to back their loans, which is why many small business owners end up being personally liable for any losses.

For example, the bank may ask you to put your home up as collateral for the loan. This magnifies the risk tenfold, and often makes this financing strategy extremely unappealing. In addition, if you applied for a business credit card and fail to make your payments on time, your personal credit score may take a hit as well.

4. Approval Process

 

Applying for the loan is only the first step. Next, the bank will take their sweet time in reviewing your request, before deciding to either grant you the loan or not. Oftentimes, lender’s will come back with an offer so far off, there’s no point in negotiating. If that’s the case, you’ve just wasted precious time and money.

If the lender does approve your request, which can take up to seven  business days, you’ll have to wait for the funds to be deposited. Funds may take as long as 60 days to show up in your account. All of these delays cost your business precious time.

Proper financing can surely make or break any business. Small business loans are readily available, so they are enticing to many business owners. However, they come with contingencies that can do your business more harm than good. If you’re considering a small business loan, take these four hurdles into account first!

 

 

 

This article was originally posted on Due.com.


Renzo Costarella is an entrepreneur, avid learner, and startup enthusiast currently living in Silicon Valley. He pioneered his first start-up fresh out of high school at 18 years old. He is one of the first few employees and the VP of Sales and Business Development at Due.

Due is a payments, eCash, online invoicing, time tracking, global payments and digital wallet solution for freelancers, small business owners and companies of all sizes.