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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,  

 

 

 

How to Build and Improve Your Credit Score

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By Debbie Gregory.

Building a solid credit history and maintaining a high credit score can have a dramatic impact on your quality of life and on your Veteran Owned Business. Not only is a high credit score essential for things such as qualifying for a loan or obtaining a credit card, but it is also important for less obvious things such as obtaining cell phone service, renting a car, and maybe even a job.

Your credit score is based on your FICO score, which ranges from 300 to 850, and is based on these factors:

  • How much money you owe
  • The regularity of your payments
  • The types of your credit
  • The length of your credit history
  • How many credit requests you’ve made.

If you’re at the top with a score between 800 and 850, you have exceptional credit and are considered to be a prime candidate eligible for the lowest interest rates. This is your reward for having a long credit history without any late payments, as well as low balances on your credit cards.

If your score is between 740 and 799, you have very good credit and are considered to be financially responsible.

If your score falls between 670 and 739, you have good credit, and are around the same range as most Americans, who have an average FICO score of 704.

A score between 300 and 579 is a poor rating. And there are those who have no credit. But don’t despair, these scores can improve.

If you need to improve your score, avoid quick-fix efforts which are most likely to backfire. Raising your scores after a poor mark on your report or building credit for the first time will take patience and discipline. If you are having trouble making ends meet, contact your creditors and explain the situation. You may be able to obtain a time extension or fees waived.

Be responsible and don’t over extend yourself, consistently pay your bills on time, and limit the amount of credit you have requested so that you can get started on the right foot or rebuild a damaged credit score.

If you need to establish credit, talk to your bank and see if they will approve you for a small loan or a low-limit credit card. You can make the payments and pay if off improving your score. Many banks that might not approve you for a credit card will do so with a savings account acting as a security deposit with their institution. You can also start with a gas or retail store credit cards too.

Veteran and Military Business Owners Association, VAMBOA,

 

Avoiding Tax Return Preparer Fraud

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By Debbie Gregory.

It’s tax time again, and many Americans who are uncomfortable with doing their own tax returns will hire a third party to do them. While there are many legitimate professional tax preparers who have solid reputations, not all tax preparers have your best interests at heart.

For example, the “Go Navy Tax Service” company, which was deemed off limits by the Marine Corps and located near Marine Base Camp Pendleton in California.  It is alleged that this would lure young Marines with promises of free tax preparation and other perks and subject them to high-pressure sales tactics to get them to deposit their refunds into various financial products.

There are very limited requirements for any type of certification, training, registration, or competency testing for tax preparers.  Anyone who is paid to prepare or assist in preparing federal tax returns must have a valid Preparer Tax Identification Number but that is about it.

There are three areas to check out when looking into a someone to prepare your taxes.   They include how long the preparer has been doing taxes, how much experience they have, and how they are making their money by doing your return.

In addition to the above alleged tactic used by Go Navy Tax Service, other red flags include a return with creative deductions, or any fabricated information in order to increase the size of your refund, or a “cash only” payment policy. Be wary of anyone promising large refunds.

Do not under any circumstances sign a blank return or allow your refund to be deposited into any bank account other than your own. Always double-check the tax forms before signing them and mailing or e-filing them. You’re the one who has to answer if you are audited by the IRS, and you could be in serious trouble for providing fraudulent information. Double check both the routing number and the account number to make sure they are yours and the refund is not going to anyone else.

Of course everyone wants to receive the largest refund possible, but don’t let the promise of a big payoff keep you from doing a thorough check on your tax preparer.

Many military installations and numerous community locations offer free tax preparation assistance through the IRS’ Volunteer Income Tax Assistance (VITA) programs.

For more military-specific resources, visit the IRS military page at https://www.irs.gov/individuals/military

Veteran and Military Business Owners Association, VAMBOA,

 

 

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