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Crowdfunding For Entrepreneurs

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Crowdfunding For Entrepreneurs

By Debbie Gregory.

Crowdfunding enables entrepreneurs to tap into the power of the Internet to raise money for their small businesses. It provides business owners a relatively inexpensive way to bankroll a young business or new product idea.  Additionally, Crowdfunding helps promote businesses and products on social media while building a base of enthusiastic customers.

Crowdfunding is when a “crowd” funds a project as opposed to having one or two major investors. Having a unique product that fills a consumer void and a strong personal or business story that compels investors to provide funding to have an opportunity for success.

Crowding works with the company selecting a crowdfunding platform, and backers pledging an amount to the fund, usually in return for a reward for their contribution. Donors receive a product or service related to the project, with the value depending on the amount donated. For instance, a $5 donation might be rewarded with a handwritten thank you card, while $50 or $100 might bring early access to the company’s product or service.

Many crowdfunding websites exist, each with its own fees and rules for use.   The top five Crowdfunding websites are Kickstarter, GoFundMe, LendingClub, Indiegogo and Prosper.

  • Kickstarter – is one of the best-known crowdfunding resources with a proven history. It is best for businesses focused on making products for consumers such as games, art, technology, music, and food. Products that are able to be shipped to campaign backers.
  • GoFundMe – doesn’t charge any fees other than the transaction fees when the funds are received. It can be challenging to get your campaign attention.
  • LendingClub – works for businesses that need quick capital and can qualify and is a fantastic debt crowdfunding option. Businesses must have been up and running for at least 12 months, have good personal credit score of at least 700 or more, with a minimum of $50,000 in annual sales.
  • Indiegogo – works best for businesses that are making consumer products that can be shipped as rewards. Companies at any stage are welcome, but most Indiegogo backers want to see that prototypes available.
  • Prosper – is best for business owners who desire a personal loan that can be used for business purposes. This is an excellent option for a startup or when a business isn’t generating enough revenue to qualify for other financing options. Keep in mind that it can place personal assets at risk.

Every crowdfunding site offers small businesses something different, with options from bigger sites that provide more exposure but a lot of competition to niche sites that have dedicated followers.

Veteran and Military Business Owners Association, VAMBOA,

 

More Financing Info For Small Businesses

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More Financing Info For Small Businesses

By Debbie Gregory.

Many business owners focus on the numbers on their balance sheet and don’t pay enough attention to their cash flow needs. To keep a company thriving, business owners need to take charge of their working capital.

Working capital is the daily, weekly and monthly cash requirement for the operations of a company.  It is paramount to the success of any business. Working capital ensures that a firm has enough liquidity to run its operations smoothly. Veteran business owners need to also be mindful of working capital.

Some of the additional benefits of having healthy working capital include:

  • A higher return for every dollar invested in the business
  • Improved credit profile
  • Higher liquidity and profitability
  • The ability to weather market ebbs and flows
  • Favorable Financing Terms

While there are many options to finance your small businesses, be aware that finance terms and fee structures are hidden and don’t clearly display the true cost of credit.

To that end, StreetShares, a veteran-run company, is currently providing one of most transparent and fair business lending products that benefit entrepreneurship across the U.S., according to Mark Rockefeller than CEO and an Iraq War.

Streetshares is launching zero fee products with a low, straightforward interest rate, allowing business owners to more clearly understand the real cost of credit as they are increasingly accustomed to in the consumer lending space.   These products will be available until May 31st.

Additionally, StreetShares is also providing a four-week interest rate rebate to small business owners so if borrowers choose to pay off their loan or line of credit draw within the four week period, they can do it without paying any fees or finance charges whatsoever.

“Our mission is to be the trusted financial solution for America’s heroes and their communities, this offering will help us achieve that,” said Rockefeller

Knowing how much working capital your business needs to function will vary, but it’s important to have a clear understanding, plan accordingly and manage your financial responsibilities.

Veteran and Military Business Owners Association, VAMBOA,

 

Veteran Owned Business Financing Methods 

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Veteran Owned Business Financing Methods

By Debbie Gregory 

Are you ready to start your business? If so, you need to think about how you’re going to fund your business. There are many different ways to secure financing, so here are some suggestions. 

  • Equity Financing – is the method of raising capital by securing investors. Think Shark Tank: in return for the investment, the shareholders receive ownership interests in the company. You need to be prepared to give up part ownership of your business. Angel investors, Venture Capital firms (and Sharks) provide not only the capital you need to grow, but often their wisdom and advice can be an invaluable resource to your business. 
  • Debt Financing – is the method of funding your company through business loans. Like any loan, you’re required to pay back that debt plus interest over an agreed-upon amount of time. This method allows you to retain 100% of your company. 

Some loan options include short-term and medium-term loans, equipment financing loans, Invoice financing, SBA loans, line of credit and merchant cash advances.  Below we take a look at them in greater detail.

  • Short-Term Loans – offer smaller amounts in financing usually paid back period ranging from three to eighteen months. These are good options for less-qualified borrowers, but usually have higher interest rates. 
  • Medium-Term Loans – offer a larger amount of capital at a relatively affordable rate. 
  • Equipment Financing – can only be used to purchase new or used equipment. Equipment lenders advance up to a specific percentage of the value of the equipment.  
  • Invoice Financing – is sometimes referred to as contract financing or factoring.  This is an asset-based lending product that allows companies to finance slow-paying accounts receivables through the sale of invoices sold to a factoring company in exchange for an immediate payment. Choose wisely especially if you want to continue to do business with this customer because often these companies will not focus on customer service when collecting the amount owed. 
  • SBA Loans – are loans issued by a traditional bank, but with very low interest rates and guaranteed by the SBA.  
  • Lines of Credit – Provides access to funds that a business owner may draw from whenever they want or need the funds for their business. Interest is only paid on the funds drawn from the line of credit, and only for the time the funds are outstanding. 
  • Merchant Cash Advance – provides a lump sum of capital, that is repaid by allowing the lending company to take a fixed percentage of your daily credit or debit card sales each day until you’ve repaid in full. 

VAMBOA, the Veterans and Military Business Owners Association encourages you to carefully investigate and select the right option for your Veteran Owned Business. 

Veteran and Military Business Owners Association, VAMBOA,  

 

 

 

Some Funding Programs for Veteran Entrepreneurs 

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By Debbie Gregory. 

Having funding is extremely import to veteran entrepreneurs.   Below are some financing options available to veteran-owned businesses.  We have listed them in alphabetical order.   Some of these funding sources are under the radar and we hope they are helpful. 

  •   7-Eleven Veterans Franchising – offers special benefits to veteran franchisees. Eligible veterans can receive up to 20% off the initial franchise fee and up to 65% financing through 7-Eleven. 
  •  Family and Friends – those who are close to you and believe in you might be interested and welcome the opportunity to assist you with financing. If you don’t ask, you don’t get. 
  •  Hivers and Strivers – an angel investment group, offers equity financing to veterans who graduated from U.S. military academies. This includes graduates from West Point, Annapolis, the Air Force, and the Coast Guard. 
  •  Little Caesars Veterans Program – offers several discounts to honorably discharged veterans (including a $5,000 franchise fee discount, a $5,000 discount on the first equipment order, and free marketing and supply services of a $30,000 value). 
  •  The Military Economic Injury Loan program – is for military reservists whose businesses were impacted when they were activated. This loan program is specifically meant to help get businesses back on track within one year of the completion of active duty service.  
  •  The SBA Express Loan Program – offers business loans of up to $350,000 without upfront fees. You should receive a response to your application within 36 hours. 
  •  StreetShares/StreetShares Commander’s Call Veteran Business Award– Veteran-owned StreetShares is an online loan marketplace that acts as an auction marketplace where veteran entrepreneurs can connect directly with investors who have an interest in investing in small businesses. They also have a $5,000 business award for veteran entrepreneurs, the Commander’s Call Veteran Business Award, presented to a veteran or military spouse-owned business with strong growth potential. 
  •  The UPS Franchise Discount – is an initiative to help veterans cover the many costs associated with opening a franchised location. This discount of $10,000 can be used to cover the UPS franchise fee, along with a 50% to 75% discount on the initial application fee. 
  •  VetFran Business Grant Fund – assists with funding for franchise opportunities via a $10,000 grant. 
  •  The Veteran Business Fund – focuses on East Coast companies in the technology, healthcare, business services, and manufacturing space and offers a maximum investment of $3 million. 

We recommend that you take the time to investigate carefully and choose wisely. 

Veteran and Military Business Owners Association, VAMBOA,  

 

 

 

The ABC’s of Factoring

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By Debbie Gregory.

When your small business faces a cash flow issue or sluggish accounts receivable, one alternative to consider is factoring.

Factoring is when a business sells their accounts receivable or invoices to a third party, known as a factoring company, at a discount. In a typical factoring arrangement, the client (you) makes a sale, delivers the product or service and generates an invoice. The factor (the funding source) buys the right to collect on that invoice by agreeing to pay you the invoice’s face value less the discount, which is typically 2 to 6 percent. The factor pays 75 percent to 80 percent of the face value immediately and forwards the remainder (less the discount) when your customer pays.

Even though invoices are sold to the factoring company at a discount, the arrangement gives your business immediate funds for the invoices.

Once used mostly by large corporations, factoring is becoming more widespread as it provides a win-win situation for both parties involved. Factoring is not a loan; it does not create a liability on the balance sheet or encumber assets. It is the sale of an asset; in this case, the invoice.

Factoring usually consists of two parts, beginning with the advance, and ending with the rebate,

One of the advantages of factoring is that your company gets money quickly rather than waiting the usual 30 or 60 days for payment. After sending an invoice to a factoring firm, a business can usually have money in its hands within 24 to 48 hours. Another advantage is that you can use the instant cash to generate growth or buy needed equipment. Furthermore, unlike traditional bank loans, factoring doesn’t require you to risk your home or other property as collateral.

On the downside, factoring will have an impact on your profit. And once you accept cash for your receivables, you give up a measure of control. For example, the factoring company could deny your ability to do business with a particular customer if they have a poor credit history or rating.

Factoring can be a great solution when your business needs a solution to short-term cash crunches. To find the best factoring company, make sure you understand your business’s needs and ask the right questions of the factoring companies, taking care to avoid getting locked into contracts or paying hidden fees.

Veteran and Military Business Owners Association, VAMBOA,

 

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