CAN Capital Blog

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The Risks of Loan Stacking

Being a small business owner can be extremely gratifying, but it certainly comes with many challenging tasks. Sitting at the top of the list is estimating funding needs. Perhaps its expansion, assets, or other unforeseen expenses, there are many reasons a small business could need additional financing. Occasionally owners will find one loan isn't sufficient and may seek additional funding from other lenders. Applying for and receiving multiple loans from different lenders at once is called loan stacking. For instance, let's say your business is doing well and you decide to take on an expansion in products. You've estimated you will need an additional $25,000 to cover costs and services. You apply for the total amount with one lender but are only approved for a portion of what you need, so you seek loans from other lenders to cover the additional funding required, ending up with multiple loans. Although loan stacking might seem like a simple fix, it can be risky for small business owners. Taking out additional loans could affect you and your business in these ways: Additional loans could violate the terms of your first loan agreement. Multiple loan payments can put a significant strain on your business's working capital. Numerous outstanding loans could negatively affect your business credit score and your personal credit score. With outstanding debt, terms on new loans may not be as favorable and cost you more in the end. Depending on the business needs, there are options when a borrower needs more funding. Speak with your current business lender. Staying in good standing and maintaining an open line of communication with your current lender is vital. When you need additional funding, talk with them first. Request that they evaluate your opportunities for more funding and better terms. Be prepared to show them why you merit the additional capital and how you plan to use it. Refinancing your first business loan is another good alternative to loan stacking. You've worked hard to grow your business and increase revenue, all while making on-time payments to your current loan. Use that to your benefit, and instead of taking on additional loan payments, replace your existing loan with another that offers better terms and will give you the extra funding you need. Explore complimentary loan products like a business line of credit, credit card, or equipment financing. These types of loan products work with a business loan because they are used for different reasons, and the guarantees differ for each loan. For instance, you have a short-term loan used to purchase products and supplies, which places your business assets as a guarantee. You have a separate loan specifically for equipment financing that puts the equipment itself as the guarantee. Protect yourself and your business by avoiding the temptation of loan stacking. What appears to be a simple fix can lead to a never-ending cycle of debt and major hardships in the future. There are better options; consider the alternatives and speak with your lender.

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The Risks of Loan Stacking

Being a small business owner can be extremely gratifying, but it certainly comes with many challenging tasks. Sitting at the top of the list is estimating funding needs. Perhaps its expansion, assets, or other unforeseen expenses, there are many reasons a small business could need additional financing. Occasionally owners will find one loan isn't sufficient and may seek additional funding from other lenders. Applying for and receiving multiple loans from different lenders at once is called loan stacking. For instance, let's say your business is doing well and you decide to take on an expansion in products. You've estimated you will need an additional $25,000 to cover costs and services. You apply for the total amount with one lender but are only approved for a portion of what you need, so you seek loans from other lenders to cover the additional funding required, ending up with multiple loans. Although loan stacking might seem like a simple fix, it can be risky for small business owners. Taking out additional loans could affect you and your business in these ways: Additional loans could violate the terms of your first loan agreement. Multiple loan payments can put a significant strain on your business's working capital. Numerous outstanding loans could negatively affect your business credit score and your personal credit score. With outstanding debt, terms on new loans may not be as favorable and cost you more in the end. Depending on the business needs, there are options when a borrower needs more funding. Speak with your current business lender. Staying in good standing and maintaining an open line of communication with your current lender is vital. When you need additional funding, talk with them first. Request that they evaluate your opportunities for more funding and better terms. Be prepared to show them why you merit the additional capital and how you plan to use it. Refinancing your first business loan is another good alternative to loan stacking. You've worked hard to grow your business and increase revenue, all while making on-time payments to your current loan. Use that to your benefit, and instead of taking on additional loan payments, replace your existing loan with another that offers better terms and will give you the extra funding you need. Explore complimentary loan products like a business line of credit, credit card, or equipment financing. These types of loan products work with a business loan because they are used for different reasons, and the guarantees differ for each loan. For instance, you have a short-term loan used to purchase products and supplies, which places your business assets as a guarantee. You have a separate loan specifically for equipment financing that puts the equipment itself as the guarantee. Protect yourself and your business by avoiding the temptation of loan stacking. What appears to be a simple fix can lead to a never-ending cycle of debt and major hardships in the future. There are better options; consider the alternatives and speak with your lender.

Read more...
Marketing Others Finances
Finances
The Risks of Loan Stacking

Being a small business owner can be extremely gratifying, but it certainly comes with many challenging tasks. Sitting at the top of the list is estimating funding needs. Perhaps its expansion, assets, or other unforeseen expenses, there are many reasons a small business could need additional financing. Occasionally owners will find one loan isn't sufficient and may seek additional funding from other lenders. Applying for and receiving multiple loans from different lenders at once is called loan stacking. For instance, let's say your business is doing well and you decide to take on an expansion in products. You've estimated you will need an additional $25,000 to cover costs and services. You apply for the total amount with one lender but are only approved for a portion of what you need, so you seek loans from other lenders to cover the additional funding required, ending up with multiple loans. Although loan stacking might seem like a simple fix, it can be risky for small business owners. Taking out additional loans could affect you and your business in these ways: Additional loans could violate the terms of your first loan agreement. Multiple loan payments can put a significant strain on your business's working capital. Numerous outstanding loans could negatively affect your business credit score and your personal credit score. With outstanding debt, terms on new loans may not be as favorable and cost you more in the end. Depending on the business needs, there are options when a borrower needs more funding. Speak with your current business lender. Staying in good standing and maintaining an open line of communication with your current lender is vital. When you need additional funding, talk with them first. Request that they evaluate your opportunities for more funding and better terms. Be prepared to show them why you merit the additional capital and how you plan to use it. Refinancing your first business loan is another good alternative to loan stacking. You've worked hard to grow your business and increase revenue, all while making on-time payments to your current loan. Use that to your benefit, and instead of taking on additional loan payments, replace your existing loan with another that offers better terms and will give you the extra funding you need. Explore complimentary loan products like a business line of credit, credit card, or equipment financing. These types of loan products work with a business loan because they are used for different reasons, and the guarantees differ for each loan. For instance, you have a short-term loan used to purchase products and supplies, which places your business assets as a guarantee. You have a separate loan specifically for equipment financing that puts the equipment itself as the guarantee. Protect yourself and your business by avoiding the temptation of loan stacking. What appears to be a simple fix can lead to a never-ending cycle of debt and major hardships in the future. There are better options; consider the alternatives and speak with your lender.

Others
Reaching “The Future”

As younger generations begin to take over the consumer landscape, it is vital small businesses market themselves appropriately. With approximately 77.5 million millennials (ages 17-34) and 25 million Gen Z’ers (ages 12-17) in the United States, small business owners can’t afford to neglect this market. Fortunately for entrepreneurs, attracting this growing audience shouldn’t be too difficult, as the up and coming generations are passionate about small businesses. In fact, not only do they prefer small businesses to large ones, they are eager to start businesses of their own one day. Sixty-six percent of millennials want to do so and nearly eight in 10 students in grades 5 through 12 say they want to be their own boss one day. Here are some tips to make sure your small business is effectively reaching “the future”: Be yourself The easiest way for small businesses to attract young consumers is by simply being themselves. After growing up watching their parents struggle during The Great Recession, many millennials and younger generations simply don’t trust big business. Instead, they prefer the transparency and authenticity small businesses provide. Whether you’re a restaurateur waking up early to pick fresh produce at the local market, or a clothes retailer that purchases pricier but longer-lasting fabrics for his or her designs, be sure to share your process with your customers. Younger generations want to know where their goods come from and are eager to differentiate themselves by buying products that are unique, personalized and outside the mainstream. So, stick to your roots and produce a product that will keep customers coming back. Strong social game Just as younger generations are wary of big business, a large majority (84%) do not connect with traditional advertising. Sales promotions, radio commercials and even internet displays don’t usually work with this group. Instead, turn to social media to grab their attention. To ensure your small business leaves a strong first impression, it’s important your social profiles (Twitter, Instagram, Facebook, etc.) are easy to read and sales-driven. Be sure consumers can make purchases or be redirected to your main website from these channels. At the same time, having your account verified on Twitter or Instagram helps legitimize your brand. Social media is also a great way for customers to share their experience and is a great opportunity for businesses to boost revenue, as 84% of millennials say user-generated content has inspired a purchase. Pay on-the-go To complement a strong online presence, small businesses need to provide convenient and safe payment options for consumers. Fast-moving younger generations are unlikely to revisit a product if they are unable to immediately buy it. Mobile payment is especially crucial, as consumers are currently making over $4 billion worth of purchase on their phones, a number that is expected to reach $34 billion by 2020. Resources small businesses can tap include PayPal, which is the industry standard for digital shoppers and eliminates the need for consumers to re-enter their information when making purchases. Also, as cash becomes less ubiquitous in the marketplace, small businesses can create Venmo accounts to provide a quick payment alternative or have smartphone credit card readers in their stores that simply require a scan. The more than 100 million young consumers in the marketplace presents a huge opportunity for small businesses to lay the foundation for future success. It is imperative SBOs invest in the technology and staff necessary to reach this large demographic and develop a young, repeat customer base. The future is now, don’t be left behind.

Others
Surviving the Storm: How Small Business Owners Can Prepare for Hurricane Season

Originally Published on SmallBizDaily on July 27, 2018.  Small Business Owners know all too well the debilitating impacts natural disasters can have on a company. In fact, according to the Federal Emergency Management Agency (FEMA), almost 40 percent of small businesses never reopen their doors after a disaster.  Here are several tips to consider that could help your business make it through hurricane season unscathed: Protect your property The most obvious concern for business owners when preparing for an incoming storm is their storefront. Without a structurally sound store, it will be hard to generate profits. Therefore, make sure the structure is properly equipped to handle a hurricane. This means installing shutters or plywood to protect windows and doors, having your roof thoroughly evaluated and anchoring any large furniture (bookcases, shelves, filing cabinets) to wall studs.  Not only do you want to avoid replacing these items, but it is vital to protect access points from looters and minimize water damage. While you can take these precautions well in advance of a storm, it is also wise and less costly to survey your property weeks or even days before a hurricane is inbound. Use this opportunity to prune branches or consult with an arborist about dead or dying trees that are adjacent to your building and may cause damage during the storm. Secure data Unfortunately, there is no way to guarantee your business will be safe from a storm. And while your storefront may be at risk when a hurricane is approaching, your data doesn’t have to be. Small business owners should back up all their files on a cloud or an accessible off-site location to avoid data loss. Depending on your needs, there are a variety of vendors that offer affordable cloud-storage systems to protect your data when a hurricane hits. If you value collaboration, Egnyte has a storage and file-sharing platform that lets businesses save their data locally and in the cloud. Or if you are simply interested in long-term storage, Zoolz provides a powerful cloud storage program that allows for unlimited users and servers. Whatever data storage solution you choose be sure to take time to fully understand the security protections they provide. People come first While infrastructure and data concerns are a priority, what is most important is your safety and the safety of your employees. Where possible, businesses should enable employees to work remotely when a hurricane is coming through. Create shared files for staffers to access, provide company laptops or even give employees assignments they can accomplish at home while they are waiting out the storm. Easily accomplishable tasks include telling a manager to outline rest-of-year goals for his/her team or telling employees to brainstorm marketing ideas for an upcoming product launch. At the same time, just as small business owners are concerned about the welfare of their companies during natural disasters, the people in your community are equally concerned about their safety and that of their families. As people rush to ensure they have the essentials before a storm, position your business as a trusted and helpful resource within your community by providing useful products and services, if applicable. This could mean using your inventory of water and nonperishable food items for consumers to purchase, or if you are a contractor, let people know you are a friendly local face should they need household repairs. It is paramount small business owners do all they can to best prepare for an incoming storm, because once it hits you will likely feel helpless. Being proactive and having a plan in place may not prevent the worst from happening, but it certainly will increase your business’s chances of survival.

Others
Looking After Number 1: Investing in Yourself as a Small Business Owner

The stresses and strains of being a small business owner can easily take their toll. With nearly half of entrepreneurs working over 50 hours a week, it can be a challenge to find time to recharge and invest in yourself. You may ask why that matters. When your mind is relaxed and clear, fresh ideas will flow. You can find time for strategic planning, such as exploring new markets and customer segments. Taking time to decompress also safeguards your health, which is the most important thing of all for both your life and your business, particularly if you’re a solo operator or have a small staff. Here are a few ways that business owners can invest in themselves in 2018: Switch off notifications and enjoy a vacation While approximately two-thirds of business owners see taking vacation as ultimately beneficial to their company, roughly half take off only major holidays – or no time at all. In fact, 24% of small business owners only take a day off here and there. The majority claim they worry about the work and responsibilities they would be missing during their time off. But even the hardest working small business owners need a break to decompress. It’s amazing how visiting new geographies and cultures can alter your perspective and inspire new directions and initiatives for your business. Often, small business owners don’t have the luxury of business travel like employees of bigger companies. Personal trips can serve as a useful option to explore and gain invaluable knowledge. We know it’s not easy to step away from your livelihood. That’s why it’s good to begin planning at least two months ahead of a trip and over-communicate your leave to your team. Fulfilling a to-do-list prior to your vacation while preparing employees for their expanded roles can also help calm your nerves. Deepen your experience and skill set through education and events In addition to full-blown vacations, mixing up your day-to-day through educational activities such as training courses can refresh and motivate you and your staff. This can be accomplished by attending out-of-town conferences or by simply listening to educational podcasts or online tutorials. Taking the time for personal education and events can also help build employee trust, as by investing in yourself, you are also investing in the future of your business. For example, say you’re the owner of a local auto repair shop looking to hone your management skills. You could check out evening courses at a local college, or potential symposiums nearby that serve as both an educational and networking resource. Or perhaps you have a long commute each morning to open up your sporting goods store. Listening to West Point graduates Michael Auzenne and Mark Horstman’s podcast, Manager Tools, is a productive way to occupy that time. Streamline the tasks that are on your plate Whether it’s taking time for vacation or continuing education, pursue an all-hands-on-deck approach. Avoid micromanaging and show faith in your staff by delegating. This will take items off your plate and ready employees to work on their own when you’re gone. Additionally, use automation services to fulfill routine tasks. Services such as Hootsuite can help grow your social media presence across more than 35 global networks, while all-in-one providers such as HubSpot can help formulate sales and marketing solutions. This allows you to focus on the tasks that require your individual attention and skills. Everyone deserves a break, and especially dedicated small business owners. Rather than refusing to step away from each problem that comes your company’s way, taking time off can allow you to tackle your work with a new perspective and renewed enthusiasm. These moments away from the office also serve as an opportunity for your team to bond and take responsibility, and to position your business for sustained success.

Marketing
How to Share Your Unique Story

Consumer activism is on the rise. Supported by access to more information via social channels and digital devices, 87 percent of today’s consumers would purchase a product based on values, and 76 percent would boycott a brand if it supported an issue contrary to their beliefs. As customers look to delve deeper and learn more, making your business more transparent can help drive growth by forging stronger connections and increasing loyalty. Here are some ways you can tell your business’s unique story: Start a company blog Blog posts can tell the story of your business in a more casual, friendly way. When done well, they go beyond the marketing speak found on many business’ “about us” pages to humanize the company and create personalized engagement with customers. To get your employees – your best brand ambassadors – on board, divvy up the writing among interested people. Start off by brainstorming topics – perhaps there’s part of your business’ culture that you’d like to highlight (maybe you’re a local dentist office that has Friday team-building lunches), or a customer-oriented task your team especially enjoys (perhaps you’re a restaurant that has regular staff tastings of new dishes). Once you have topics for the next six months, you can develop a calendar to keep everyone on track and stick to a manageable schedule. Keeping to a regular cadence of posts can help sustain interest among readers. When drafting posts, it’s best to make them succinct. Adding visual content such as video and photography can increase views by as much as 94 percent, while tying into local or national news topics can keep posts relevant. Show off your business through “customer appreciation” events Hosting events is a great way to showcase your business to your customer base and local partners. It’s a chance to show your appreciation for them and be transparent about what you do and how you do it. You could host a company “Open House,” giving customers a tour of your workplace and your latest gadgets, and a chance to chat with your team. To appeal to families, incorporate games and activities for children to do while their parents learn about your unique offerings. You could also broaden the appeal of the event by making it educational. Say you’re an auto repair shop, you could give a free live demo to customers on how to change a tire, check the oil, or how to jumpstart a dead battery. Adding a how-to element to the day helps to attract a wider audience. Why not make this a regular occasion, say once a quarter? To spread the word ahead of time, make sure to share updates leading up to the event on social media and via your email distribution lists, and hand out printed flyers outlining the day’s activities. Rally around causes on social media By strategically tapping into social, you can spread the word about your business and showcase your core values to potential customers in a far-reaching, affordable way. As a first step, take time to share posts and advocate for other organizations that you support. Maybe you’re a restaurant owner eager to advocate for budding chefs in your local area. You could like and share tweets from nonprofits that support younger people looking to get into the business. Additionally, make sure to amplify what you and your employees are up to. Perhaps you’re a local doctor’s office and a staff member is speaking at an upcoming conference. Draft a short update to share this and post it on LinkedIn to target a professional audience. As customers increasingly seek to look behind the curtain, embrace the chance to show off your business by leveraging all the resources and channels available.  Opening up about your people and your values can create a bond that goes beyond products and services and is therefore deeper and longer-lasting.