June 2009 Archives

June 27, 2009

Peer-to-Peer Social Lending Sites

An article in Business Week this week points out that unsecured credit for small businesses is drying up and that there's a clear need for new types of small business financing. One new type of financing that has emerged in the past year or so is "social financing": Peer-to-peer lending sites pair up borrowers who list their loan needs with private investors who are willing to offer loans at certain rates. The social lending websites getting the most press are Lending Club, Zopa, Prosper, Loanio, and Kiva.org. With the country in such a credit crunch, these online services may be worth looking into.

To understand the basics of seeking a loan for your business, see Nolo's article The Lowdown on Business Loans.

June 19, 2009

Avoid Funding Your Business With Credit Cards

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An article posted in today's New York Times reported that, as of April, 59 percent of America's small firms relied on credit cards to help finance their day-to-day operations, up from 44 percent at the end of last year. Because credit card terms have worsened recently, it makes sense to find other forms of financing than credit cards. 

One innovative new company that provides financing for small businesses, OnDeck Capital, offers loans up to $100,000 based on a business's cash flow and/or credit card transactions. OnDeck collects the loan repayments by automatically debiting your bank account for a small amount (typically $100) each day, assuring you won't get behind on loan payments.

OnDeck's small loans are easier to qualify for than a traditional loan and more quickly processed, but interest rates aren't low -- usually 18% to 20% -- and you still must have sufficient cash flow to repay them. One note of caution: OnDeck requires that business owners sign a personal guarantee, meaning your house, savings, and other assets are at risk if your business fails while you still owe them money and you don't have the cash to pay it. But definitely worth a look -- they're at www.ondeckcapital.com.


To learn more about raising capital for your business, see Nolo's Business Financing, Loans & Capital area.

June 9, 2009

SBA Loans Will Soon Be More Available

It looks like it will soon be easier to get an SBA small business loan, says a recent post by Stacy Perman on Business Week's Small Business Blog. As part of the 2009 stimulus package, the administration provided $730 million toward the SBA small business loan guaranty program and the SBA micro-loan program.

To learn about SBA loans, check out this presentation on SBA loans from SBA.gov. Skip ahead to slide 12 to get into the four main SBA loan programs (you'll probably be interested only in the 7(a) guaranty program and the micro-loan program).