Alternative Financing for Your Business

Last week, the Federal Reserve announced that they are considering a December rate hike. This means higher interest rates on loans and stricter lending requirements. If you are a small business owner, now might be a good time to consider lending sources outside of traditional bank loans and mortgages.

Charles Green, author of the new book, Banker’s Guide to New Small Business Financing, calls alternative lenders “innovative” lenders because they are taking a more innovative approach in evaluating potential small business borrowers and loan risk.

In this post, I am going to list some examples of alternative financing. Each one has its own advantages and drawbacks. If you are considering a loan for your business, it will be worth your while to take a look at the opportunities outlined below.

Credit Cards
The Small Business Administration reports that over 10% of small business financing from young firms comes from personal and business credit card debt. Many people have successfully started their business using plastic. For short-term business liquidity, credit cards are a handy but expensive source of credit.

Financing your business with a credit card

Remember though that business credit cards are generally exempt from federally mandated protections from sudden interest rate hikes that personal credit card holders enjoy.

Alternative platforms like Funding Cirle, Lending Club, or Kiva Zip are popular for peer-to-peer loans. They allow businesses to solicit contributions from online communities, providing an independence that banks do not. These crowdlending sites boast confidence, speed of turnaround, and high approval rates.

However, they also often have higher interest rates than banks. Lenders also tap into thousands of data sources, including social media sites to analyze a borrower’s ability to pay a loan.

Legal Expense Deferred Compensation
Some law firms have an arrangement called deferred compensation. With this, borrowers pay nothing until they raise a funding round. Once the business funding is secured, the law firm collects both the fees that have been accruing and a piece of the company’s equity.

This is beneficial to those business ventures where the legal cost associated with getting started is particularly high. This kind of transaction should be perceived as both a loan and an investment stake by the law firm.

There are dozens of platforms that cater to crowdfunding, such as Kickstarter and Indiegogo. With crowdfunding, aspriring entrepreneurs pitch their startup ideas online in the hopes of raising capital. Instead of promising repayment, they provide rewards to lenders.

opportunities for small business financing

Both Kickstarter and Indiegogo have all-or-nothing campaigns: a model that provides motivation for backers and decreases risk for creators. Both platforms charge 5% of the campaign’s total funds raised.

Factoring Receivables
Factoring involves a business selling its accounts receivable to a third-party financial company called a “factor.” Large corporations have long used this method to increase cash and reduce the management of receivables. Luckily, it is now becoming a popular option for small businesses

bank financing

This transaction can turn invoices into cash in as little as a day, rather than waiting 30 to 60 days for a customer payment. ΡwG*Wl1nhe factor buys the business’s block of receivables, they buy it at a discount$)qWO-‘dmes a substantial one.

Preparing for Your Retirement? Here are Some Steps to Get You Ready!

Here are some hard facts from the Department of Labor:
1. Fewer than half of Americans have calculated how much they need to save for retirement.
2. In 2012, 30 percent of private industry workers with access to a defined contribution plan (such as a 401(k) plan) did not participate.
3. The average American spends 20 years in retirement.

Planning your retirement

Once you determine what will give you peace of mind when you retire, it is important to know how you can get there financially. Financial security in retirement doesn’t just happen. It takes careful planning and, yes, money. I’ll help you get started with some simple and easy steps.

Define Your Retirement
By now, you might already have some ideas on how to spend your retirement. Write your objectives down, listing down your most important plans first. Focus on ideas for now, we’ll get to your budget later. Be as specific as you can. For instance, instead of travel, write down “out-of-state hiking trips”. Instead of community involvement, write down “volunteering at PAWS every weekend”.

Be practical and rule out unnecessary expenses. The more specific and descriptive you are, the more tangible your retirement will be. This will also give you realistic goals which you can look forward, and that makes them more attainable.

Run Your Numbers
Calculate how much you need to save for retirement. Retirement is expensive. Experts estimate that you will need at least 70% of your retirement income (for lower earners, it’s at 90%) to maintain your standard of living. You can take charge of your financial future by creating a retirement budget.

How to take control of your retirement

Your budget needs to include:

  • How much money is coming in
  • How much it will cost to achieve your retirement goals
  • How much debt you have

Track your income and expenses for a few months, and determine how much money you’ll need in retirement to support your chosen lifestyle. You might also need to do a financial checkup of your investments. If you have any debt, make sure that you are meeting your monthly payments to knock it down and that you are paying the lowest possible interest rate for it. You can also try paying off your smallest debt first, so that you can gain a sense of accomplishment and feel confident that you can eventually go after the bigger ones.

Find Ways to Cut Your Expenses (Save!)
Make saving a priority! If you are already saving for retirement or for another goal, keep going. Start small if you have to and try to increase the amount you save each month.

How to save for your retirement

Now is also the time to cut your expenses. Begin by listing your bills and figure out ways on how to trim them. Maybe you don’t need that many cable channels, or maybe you don’t need to eat out three times a week. Even cutting a seemingly small expense, such as movie night every month, can bring you closer to the retirement of your dreams.

Claim Retirement Savings Tax Breaks
You can defer thousands of dollars on taxes in a 401(k) and in an Individual Retirement Account (IRA). Low-income workers who save in retirement accounts may also be able to claim the saver’s tax credit.

The Basics To Attend Financial Sustainability



Sustainability is a common term in environmental issues, but lately it becomes more of a personal finance term too. That’s because financial decisions should be sustained over the long term. Your finances need be able to support you and your family over an extended period. Financial sustainability means having plans and flexibility. You need to have plans B, C and D. In this post, you can learn some proven tips that will be able you to see your money stay around as long as you do.


Save Before You Invest

It’s a good idea to save enough money equivalent to your expenses for at least nine months before even thinking about investing. While planning for your savings strategy, make sure you put money to your retirement funds, especially if your employer still offers a 401 (k) match. Once you already have an emergency fund, don’t stop there. An excellent goal is to save at least 10% of your earnings each month or as you can afford. By the time you retire, you can use your savings to continue living comfortably.

Maintain Good Credit History

Paying your bill on time leaves an impression to banks and issuers that you’re a risk worth taking. A late payment on credit cards or mortgages will damage your credit score and overall credit health. Banks and issuers will likely look into your payment history when evaluating your credit risk. You’ll get a notion of responsible and reliable borrower if you have a long-standing history of on-time payments. Otherwise, a poor history suggests you may not repay debts and too costly to let you borrow money. A credit report is similar to an adult report card.


Spend for Retirement

A very easy rule to follow for saving is that you spend less than you earn. That might not be as simple if you’re having a problem keeping up with bills. A good spending plan would do the trick. Some people call this a budget, but since we’re referring retirement as something to buy, the term spending plan is more appropriate. Consider a budget not as a means to the end of buying a large television but a budget that will sustain over many decades and prepare you financially once you’re deep into retirement.

Savings Plans Are Good If You Can Get Them

If you’re working for a company that offers a traditional retirement plan, such as a 401 (k) plan, it’s an excellent idea to put in your money until the company stops matching your contribution. You may not make good gains some years on the funds within the 401 (k), but at least you’ll have a peace of mind knowing that you have the company match that doubled your contribution. A high-interest rate will come out of that. Your money may not be doubled by the time you’re entitled to take it out, but it’s going to be a lot higher than what you could typically make on any other investments.

Make the Most of Income Sources Other than Savings

Your decision about when to start taking Social Security can either cut your retirement income or boost it. For married couples, they can claim spousal benefits to get a substantial increase in income. You need to factor your maintenance expense if your income comes from rental properties. There’s a significant advantage of smart planning that will help you over the long period.

Americans Retired Earlier Than Planned


Americans are more confident than ever about their chances of experiencing a comfortable retirement, but there’s a thing they are seriously delusional about: when they will finally call it quits.

couple_relax_on_beach_0According to the Employee Benefit Research Institute’s latest retirement confidence survey, there’s a significant gap between when workers expect to retire and when people actually retired or left the workforce. Half of retirees say their retirement came earlier than planned.

Out of 10 workers being surveyed, less than one say they expect to leave the workforce before the age of 60. However, 35% of retirees say they stopped working before the age of 60. Comparatively, only 28% managed to retire between the ages of 60 and 64 and only 9% made it to the traditional retirement age of 65. Even slimmer percentage those who made it until age 70 at a mere 6% when, in fact, more than a quarter of workers say they want to do.

It’s clear in the study that the majority of premature retirees did not leave work because that was their plan. Sixty percent of early retirees say they had to retire because of health problems or disability issues. Twenty-seven percent say their company closed or downsized, and 27% cited taking care of a spouse or family member.

When People Plan To Retire

expected retirement age

When People Actually Retired

actural retirement age

These stats aren’t consistent with the retirement narrative that came out in the years following the Great Recession. The general instruction for older workers whose savings were significantly affected by the financial crisis was to lower work longer and perform more with less. Almost 70% of workers say they want to keep making money after they retire by continuing to work part-time. However, in reality, only 23% of today’s retirees say they’re working for pay in retirement.

The expectation gap is quite alarming when considering the reason people are so eager on dragging out their working years. Although, nearly all retirees who are working in retirement say they do it because they enjoy doing so, more than 50% admitted they needed the extra money to make ends meet. Around 40% said their investments and savings had dropped steeply.

There are real financial consequences for workers who did not mind their retirement age enough. They may not save enough money to last them through their golden years.

The report says “Retirees who retire earlier than planned are more likely than those who retire when expected or later to say they are not confident about having enough money for a comfortable retirement,” or perhaps about paying for long-term care expenses, medical expenses, and basic expenses.

This year’s EBRI survey wasn’t all negative for retirees. Workers today are more confident about their chances of experiencing a comfortable retirement than they have in years.

Workers who are very confident about retirement up from 13% in 2013 to 22% in 2014, and almost as high as the rate among workers prior to the recession. Forty-eight percent of workers are taking proactive steps calculating the amount of money they need to save for retirement now for later use, up from 44 percent in 2014.

Google Wallet Offers More Secure Stash Money For Their Users


Google (GOOGL) will be making a major improvement to its mobile payment service, Google Wallet. Google user’s money will become a lot safer with the latest development. According to a Google spokesperson, the company’s will make all cash balances that stayed in Google Wallet FDIC-insured. Most users probably still don’t know it.


Currently, the money you stash in mobile payment apps, such as PayPal, Venmo, and Google Wallet is not FDIC-insured. Only funds held by banking institutions are protected by the Federal Deposit Insurance Corporation up to $250,000. History has proven time and again that banks closed when depositors least expected it to happen. So, the FDIC-insured fund provides some extra peace of mind to consumers.

Unlike banks, the new money transfer services fall under the same category of the likes of payday lenders and prepaid debit cards, which are all considered non-banking institutions. As a nonbank, they aren’t required by law to be federally insured.

Consumers don’t normally park their money in these places. They are using them as tools to transfer funds from one entity or person to another. But customers still use them to stash their cash in some situations. For example, customers of Google Wallet who send or receive cash from other Google users can choose to keep funds, which is called Wallet Balance.

As of this writing, under the user agreement stated in Google Wallet, balances are not FDIC-insured. But, a Google spokesperson confirmed in a statement recently that its current policy has changed. Google will hold Wallet balances that are FDIC-insured in multiple banking institutions, which means if the company fails, user’s funds will be protected. The spokesperson did not say any further details or say when the update would be implemented.


Neither PayPal nor Venmo, which are both eBay (EBAY) products, offers FDIC insurance for users who keep cash in their accounts. A spokesperson for both companies says they don’t make public how they store stash funds of their users.

If you use their primary purpose, which is to transfer money simply from one point to another, you shouldn’t have to worry. If the cash you’re sending is tied to a credit card or bank account, your funds are safe. PayPal offers zero liability protection for users, meaning they are covered for fraudulent account activity.

For example, your friend is chipping in $200 for her share of a group outing or tour. Rather than transferring the amount you received from your friend directly from Venmo to your back account, you decided to just leave that number there. You might prefer to have a little cash on hand in case you need quick transfers. But that money sleeping in your Venmo account isn’t insured.

The same for PayPal. You may use your PayPal account to pay your online purchase. If, in any case, you want to return the item and the company refunds you, the cash you use for payment won’t go back to your bank account. Instead, it will go back to your PayPal account, which isn’t FDIC-insured. You may just decide to leave that money in PayPal and use it the next time you shop online. The amount is not federally insured.

This was not the case for PayPal for many years. The company used to store user’s unused money in various banks that were FDIC-insured. It stopped the practice in 2012 as California state law made it more expensive for the company to do so.

In worst case scenario, if these non-banking institutions fail and file for bankruptcy, their users would become their creditors. If the users want to get their money back, they will need to go through a bankruptcy court just like everyone else to get their money back. With FDIC insurance, the customers will just wait a few days for the payment from the government.