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Best Banks for Nonprofits

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The best banks for nonprofit organizations offer a free or low-fee business checking account, access to credit and ample online tools that help streamline your operations. We scoured our top-rated business accounts to find those with features and services tailored to nonprofit organizations.

LendingClub: Best online bank for nonprofits

LendingClub is a top-rated online bank that offers traditional business solutions with a few added perks. The bank’s Tailored Business Checking account, for example, offers unlimited ATM fee rebates and 1% cash back on some debit card purchases.

at LendingClub Bank, Member FDIC

Business checking

  • $10 monthly fee, waived with an average monthly balance of $5,000 or more.

  • Unlimited fee-free transactions and cash deposits (through ATM).

  • Free ATM access worldwide. Unlimited rebates for fees charged by other banks when you use their ATMs.

  • Account earns 0.10% annual percentage yield on balances of $5,000 and higher.

  • Unlimited 1% cash back on online and signature-based credit transactions made with your debit card — provided you maintain an average monthly balance of $5,000 or more.

  • Access to Autobooks — an invoicing and online payment software that allows you to create and send invoices, accept payments, generate reports and reconcile transactions for accounting.

Additional services

  • Business credit cards, including cash back (up to 3%) and balance transfer options.

  • Business loans through Accion Opportunity Fund.

  • Merchant services and cash management solutions.

U.S. Bank: Best brick-and-mortar bank for nonprofits

U.S. Bank’s free nonprofit business checking account includes an annual bucket of free transactions and cash deposits, plus merchant services to help your organization accept donations online. The bank also offers a nonprofit business credit card that does not require a personal guarantor.

Business checking

  • Open your account online, in person or over the phone.

  • Free nonprofit business checking includes 1,800 fee-free transactions and 300 free cash deposits per year.

  • A nonprofit account earns interest, but the rate is minimal (APY of 0.005% as of this writing).

  • Minimum opening deposit of $100.

  • Nonprofit checking includes credit card payment processing (additional fees apply).

Additional services

  • More than 2,000 branches across 26 states.

  • Business credit cards, including the U.S. Bank Mastercard Community Card, which does not require a personal guarantor.

  • Business savings and money market accounts.

  • Business lending program that includes term loans, real estate loans, equipment financing and business lines of credit.

BlueVine: Best non-bank option for nonprofits

BlueVine technically isn’t a bank — it’s a financial technology company — but its high-yield business checking and business lending options could be a great fit for digital-savvy nonprofit organizations. Rest assured, all deposit accounts are FDIC insured up to $250,000.

BlueVine Business Checking

at BlueVine, Deposits are FDIC Insured

Business checking

  • No monthly service fee, overdraft fees or minimum opening deposit.

  • Earn 1.20% on your balance up to $100,000.

  • Unlimited fee-free transactions.

  • Cash deposits available at Green Dot locations, fees ($4.95 per deposit) and deposit limits apply.

  • No ATM fees at more than 37,000 MoneyPass ATMs nationwide.

Additional services

  • Business lines of credit available.

Fifth Third Bank: Best regional bank for nonprofits

Fifth Third Bank’s Business Standard Checking account typically carries an $11 monthly service fee, but that charge is waived for nonprofit organizations. The regional bank operates nearly 1,100 retail branches in 11 states, and customers have access to roughly 53,000 fee-free ATMs across the country.

Business checking

  • No monthly fee for nonprofit organizations.

  • 250 fee-free transactions and up to $5,000 in free cash deposits per month.

  • No minimum balance or opening deposit requirement.

Additional services

  • Business lending program that includes term loans, real estate loans and business lines of credit.

  • Business savings and money market accounts.

  • Discounted payroll services through Paycor.

Community banks, credit unions and CDFIs

Localized nonprofit organizations may find a better fit with a community bank or credit union. These financial institutions typically offer business banking and lending services, but may be better aligned with your organization’s mission than a national bank or for-profit financial institution. Credit unions, for example, are also not-for-profit organizations.

Nonprofit organizations may also want to seek out Community Development Financial Institutions, or CDFIs. These banks and credit unions have a strong community focus and serve people who are often not served by mainstream banking institutions.

How to choose a bank for your nonprofit

Consider the following factors when choosing a bank for your nonprofit:

  • Fees: Look for a bank that offers a free business checking account or has a specialized option designed for nonprofit organizations.
  • Accessibility: This can look different for every organization. Some nonprofits need online tools that help streamline operations. Others prioritize in-person banking and need easy branch access.

  • Additional services: Business checking accounts are often the foundation of a business banking relationship, but as your organization grows you may need other business accounts to build savings, access credit or process donations and payments.

  • Values: Consider a bank’s business activities, community outreach and philanthropic interests that align with your organization’s mission and values.

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How to Get a Loan to Buy a Business

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Not everyone wants to take on the challenge of building a business from the ground up. An attractive alternative can be to step into a business that’s already up and running by purchasing it from the current owner. Some advantages of buying a business may include easier financing, an established customer base and an existing cash flow.

Buying a business is different from buying a franchise. Franchises have a set business model that’s proven to work. However, when you buy an independently operated business, it’s important to show the lender that you, your previous business experience and the business you want to buy are a winning combination.

What lenders look at when you want to buy a business

Because lenders can view the performance record of an existing business, it’s typically easier to get a loan to purchase an existing business compared with startup funding. However, your personal credit history, experience and details about the acquisition business still matter.

Your personal credit and experience

Through credit reports and credit scores, lenders are able to assess how you’ve managed debt in the past and potentially gain insights into how you will handle it in the future. Your education and experience will also be evaluated.

Solid credit history: Lenders look to see if you have a history of paying your debts. Foreclosures, bankruptcies, repossessions, charge-offs and other situations where you haven’t paid off the full amount will be noted.

Business experience: Having worked in the same industry as the business you want to purchase is helpful. Related education can also be viewed as a positive.

Other businesses you’ve owned

Having a track record of operating other successful businesses can have a positive influence on lenders when it comes to buying a new operation.

Record of generating revenue: Business financial statements can help a lender document that your current or past businesses were well-managed and turned a profit.

Positive credit record: Lenders review business credit scores and reports to verify creditworthiness and to identify liens, foreclosures, bankruptcies and late payments associated with your other businesses.

The business you want to buy

Just because a business is operating doesn’t mean it’s a good investment. Lenders will ask for documentation, often provided by the current owner, to assess the health of the operation.

Value of the business: Like you, your lender will want to ensure that you’re buying a business that has value and that you’re paying a fair price.

Past-due debts: Lenders will be interested in the business’s past-due debts, which may include liens, various types of taxes, utility bills and collection accounts.

Documentation

Most lenders will let you know what they want included in the loan application package, but there are some personal documents that are typically requested, as well as ones related to the business you want to purchase.

Personal documents

The following documents are used to evaluate your personal finances, business history and plans for operating the business after its purchase:

  • Personal tax returns.

  • Personal bank statements.

  • Financial statements for any of your other businesses.

  • Letter of intent.

Business documents

Documents from the current business owner will also be evaluated. Some common ones requested by lenders include:

  • Business tax returns.

  • Profit and loss, or P&L, statements.

  • Business balance sheet.

  • Proposed bill of sale.

  • Asking price for inventory, machinery, equipment, furniture and other items included in the sale.

Where to get a loan to buy a business

Compared with finding a loan to start a business, getting funding to buy an existing business may be easier. Here are three popular funding options to check into for a business loan:

Bank loans

Banks generally offer the lowest interest rates and best terms for business loans. To qualify for this type of loan, you’ll typically need a strong credit history, plus the existing business will need to be in operation for a certain minimum of years and generate a minimum annual revenue amount set by the lender.

SBA loans

If borrowers don’t qualify for a traditional bank loan, then SBA loans, ones partially guaranteed by the Small Business Administration, may be the next option to explore. Because there is less risk to the lender, these loans can be easier to qualify for. Banks and credit unions frequently offer SBA loans in addition to traditional bank loans.

Online business loans

Another option to consider is online business loans. Online business loans may offer more flexibility when it comes to qualification, compared with bank and SBA loans. Minimum credit score requirements can be as low as 600, and in a few cases lower. Generally, interest rates are higher than what’s available with a traditional bank loan.

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Accounts Receivable Financing: Best Options, How It Works

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Accounts receivable financing, also known as invoice financing, allows businesses to borrow capital against the value of their accounts receivable — in other words, their unpaid invoices. A lender advances a portion of the business’s outstanding invoices, in the form of a loan or line of credit, and the invoices serve as collateral on the financing.

Accounts receivable, or AR, financing can be a good option if you need funding fast for situations such as covering cash flow gaps or paying for short-term expenses. Because AR financing is self-securing, it can also be a good choice if you can’t qualify for other small-business loans.

Here’s what you need to know about how accounts receivable financing works and some of the best options for small businesses.

How Much Do You Need?

with Fundera by NerdWallet

How does accounts receivable financing work?

With accounts receivable financing, a lender advances you a percentage of the value of your receivables, potentially as much as 90%. When a customer pays their invoice, you receive the remaining percentage, minus the lender’s fees.

Accounts receivable financing fees are typically charged as a flat percentage of the invoice value, and generally range from 1% to 5%. The amount you pay in fees is based on how long it takes your customer to pay their invoice.

Here’s a breakdown of how the process works:

  1. You apply for and receive financing. Say you decide to finance a $50,000 invoice with 60-day repayment terms. You apply for accounts receivable financing and the lender approves you for an advance of 80% ($40,000).

  2. You use the funds and the lender charges fees. After receiving the financing, you use it to pay for business expenses. During this time, the lender charges a 3% fee for each week it takes your customer to pay the invoice.

  3. You collect payment from your customer. Your customer pays their invoice after three weeks. You owe the lender a $4,500 fee: 3% of the total invoice amount of $50,000 ($1,500) for each week.

  4. You repay the lender. Now that your customer has paid you, you’ll keep $5,500 and repay the lender the original advance amount, plus fees, $44,500. You paid a total of $4,500 in fees, which calculates to an approximate annual percentage rate of 65.7%.

Because accounts receivable financing companies don’t charge traditional interest, it’s important to calculate your fees into an APR to understand the true cost of borrowing. APRs on accounts receivable financing can reach as high as 79%.

Accounts receivable financing vs. factoring

Accounts receivable financing is often confused with accounts receivable factoring, which is also referred to as invoice factoring. Although AR financing and factoring are similar, there are differences.

With invoice factoring, you sell your outstanding receivables to a factoring company at a discount. The factoring company pays you a percentage of the invoice’s value, then collects payment directly from your customer. When your customer pays, the factoring company gives you the rest of the money you’re owed, minus its fees.

With accounts receivable financing, on the other hand, your invoices serve as collateral on your financing. You retain control of your receivables at all times and collect repayment from your customers. After your customer has paid their invoice, you repay what you borrowed from the lender, plus the agreed-upon fees.

Invoice factoring can be a good financing option if you don’t mind giving up control of your invoices and you can trust a factoring company to professionally collect customer payments. If you’d rather maintain control of your invoices and work directly with your customers, AR financing is likely a better option.

Best accounts receivable financing options

Accounts receivable financing is usually offered by online lenders and fintech companies, many of which specialize in this type of business funding. Certain banks offer AR financing as well.

If you’re looking for a place to start your search, here are a few of the best accounts receivable financing companies to consider.

altLINE

A division of the Southern Bank Company, altLINE is a lender that specializes in AR financing. AltLINE offers both accounts receivable financing and invoice factoring, working with small businesses in a variety of industries, including startups and those that can’t qualify for traditional loans.

AltLINE offers advances of up to 90% of the value of your invoices with fees starting at 0.50%. To get a free quote from altLINE, call a representative or fill out a brief application on the lender’s website. If you apply online, a representative will contact you within 24 hours.

AltLINE’s website also contains a range of articles for small-business owners, covering AR and invoice financing, payroll funding, cash flow management and more. AltLINE is accredited by the Better Business Bureau and is rated 4.7 out of 5 stars on Trustpilot.

1st Commercial Credit

1st Commercial Credit offers accounts receivable financing in addition to other forms of asset-based lending, such as invoice factoring, equipment financing and purchase order financing. The company works with small and medium-sized businesses, including startups and businesses with bad credit.

With 1st Commercial Credit, you can finance $10,000 to $10 million in receivables with fees ranging from 0.69% to 1.59%. You can start the application process by calling a sales representative or filling out a free quote form on the company’s website. After your application is approved, it typically takes three to five business days to set up your account, then you can receive funds within 24 hours.

1st Commercial Credit is accredited by the Better Business Bureau and has an A+ rating.

Porter Capital

Porter Capital is an alternative lender specializing in invoice factoring and accounts receivable financing. The company also has a special division, Porter Freight Funding, which is dedicated to working with businesses in the transportation industry.

With Porter Capital, you can receive an advance of 70% to 90% of your receivables and work with an account manager to customize a financing agreement that’s unique to your business. Porter funds startups and established businesses, offering fees as low as 0.75% monthly.

You can provide basic information about your business to get a free quote and receive funding in as little as 24 hours. Although Porter Capital isn’t accredited by the Better Business Bureau, it does have an A+ rating; the company also has 3.7 out of 5 stars on Trustpilot.

Additional options

Although AR financing and factoring are distinct, many companies blur the lines between the two. As you compare options, make sure you understand the type of financing a lender offers.

If you decide that invoice factoring may be a fit for your business, you might consider companies like FundThrough, Triumph Business Capital or RTS Financial.

Find and compare small-business loans

If accounts receivable financing isn’t right for you, check out NerdWallet’s list of the best small-business loans for business owners.

Our recommendations are based on the market scope and track record of lenders, the needs of business owners, and an analysis of rates and other factors, so you can make the right financing decision.

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Banking

How to Write a Business Plan for a Loan

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A business plan can improve your chances of being approved for a loan by helping to persuade lenders that your business is worth investing in and that you have the ability to repay the loan. Many lenders will ask that you include a business plan along with other documents when submitting your loan application.

When applying for a business loan, you want to highlight your abilities, justify the need for your business and define your financial needs. A well-thought-out business plan gives you the opportunity to do that.

Business plan sections and characteristics

A traditional business plan format is typically what lenders are looking for as part of your loan application. This comprehensive layout gives you space to provide detailed information about your business.

Executive summary

The executive summary is used to spark interest in your business. It may include high-level information about you, your products and services, your management team, employees, business location and financial details. Your mission statement can also be added here.

Company overview

The company overview is an area to describe the strengths of your business. If you didn’t explain what problems your business will solve in the executive summary, do it here. Highlight any experts on your team and what gives you a competitive advantage. You can also include specific details about your business such as when it was founded, business entity type and history.

Products and services

Use this section to demonstrate the need for what you’re offering. Describe your products and services and explain how customers will benefit from having them. Explain any patents or copyrights here.

Market analysis

Here you can demonstrate that you’ve done your homework and showcase your understanding of your industry, current outlook, trends, target market and competitors. You can add details about your target market that include where you’ll find customers, ways you plan to market to them and how your products and services will be delivered to them.

Marketing and sales plan

If you didn’t cover marketing strategies in your market analysis section, you can devote an entire section to the topic. The main goal is to provide details on how you plan to attract your customers and build a client base. You can also explain the steps involved in the sale and delivery of your product or service.

Operational plan

The operational plan section covers the physical requirements of operating your business. Depending on your type of business, this may include location, facility requirements, equipment, vehicles, inventory needs and supplies. Production goals, timelines, quality control and customer service details may also be included.

Management team

This section illustrates how your business will be organized. You can list the management team, owners, board of directors and consultants with details about their experience and the role they will play at your company. This is also a good place to include an organizational chart.

Funding request

This is where you explain the loan amount you want and how the funds will be used. You can add details about how the money will be spent. Also include your strategy for paying off the loan.

Financial statements

Financial statements can indicate the financial health of a business and also demonstrate to the lender that you have the ability to repay the loan. Include three to five years of actual or projected income statements, cash flow statements and balance sheets. For an existing business, consider also including an expense analysis and a break-even analysis. When using forecasted statements for a new business, explain your projections. Graphs and charts can be useful visual aids here.

Appendix

Finally, if necessary, supporting information and documents can be added in an appendix section. This may include letters of reference, product pictures, licenses, permits, contracts and other legal documents.

What lenders look for in your business plan

A lender will typically evaluate your loan application based on five C’s — or characteristics — of credit: character, capacity, capital, conditions and collateral. While it won’t contain everything the lender needs to complete its assessment, your business plan can highlight your strengths in each of these areas.

Character

A lender will assess your character by reviewing your education, business experience and credit history. This assessment may also be extended to board members and your management team. Highlights of your strengths can be worked into the following sections of your business plan:

  • Executive summary.

  • Company overview.

  • Management team.

Capacity

Capacity centers on your ability to repay the loan. Lenders will be looking at the revenue you plan to generate, your expenses, cash flow and your loan payment plan. This information can be included in the following sections:

  • Funding request.

  • Financial statements.

Capital

Capital is the amount of money you have invested in your business. Lenders can use it to judge your financial commitment to the business. You can use any of the following sections to highlight your financial commitment:

  • Operational plan.

  • Funding request.

  • Financial statements.

Conditions

Conditions refers to the purpose and market for your products and services. Lenders will be looking for information such as product demand, competition and industry trends. Information for this can be included in the following sections:

  • Market analysis.

  • Products and services.

  • Marketing and sales plan.

Collateral

Collateral is an asset pledged to a lender to guarantee the repayment of a loan. This can be equipment, inventory, vehicles or something else of value. Use the following sections to include information on assets:

  • Operational plan.

Free resources for writing a business plan

The Small Business Administration, or SBA, offers a free self-paced course on writing a business plan. In addition, SCORE, a nonprofit organization and resource partner of the SBA, offers free assistance that includes a step-by-step downloadable template to help startups create a business plan, and mentors who can review and refine your plan virtually or in person.

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