Lending Library

Debit cards continue to be a pillar of the modern payment ecosystem. A 2019 study by the Federal Reserve found that 31% of consumer purchases were paid for with a debit card. While they look almost indistinguishable from credit cards, debit cards function essentially like cash in practice. For consumers, they’re the best of both worlds—the simplicity of credit cards coupled with the hassle-free nature of cash.

For small businesses, though, debit cards function more like credit cards because you’ll be charged a variety of fees each time a debit card is swiped at your establishment. However, the fee systems for both types of payment are different—and in many cases, the popularity of debit cards is well worth the fees.

Debit cards vs. credit cards.

Debit cards look like credit cards, but the similarities mostly end there. As the moniker suggests, debit cards debit money out of an account, typically a checking or savings account at a bank or other financial institution. When a purchase is made, the funds are deducted directly from the buyer’s account. In this way, debit cards are similar to cash.

Credit cards, on the other hand, involve financial institutions—like banks or credit card companies—extending credit to a consumer. Purchases are made on this credit, and the consumer makes repayments to the credit card issuer.

In a sense, debit and credit cards work in opposite ways for consumers—while credit cards run up credit, debit cards debit funds out of an account. For small businesses, though, accepting payments is fairly similar for both credit and debit cards.

Why are small businesses charged debit card fees?

Both debit and credit cards require sellers to pay a range of fees every time a transaction occurs because a lot of entities are involved whenever a card is used—and all of these entities want something in return for their services.

3 main groups expect to get paid when someone uses a debit card at your business: banks, credit card companies, and debit card processors. The fees charged by these companies can be a combination of flat fees and percentages based on the purchase price.

Types of debit card fees.

The 3 types of fees usually charged on every debit card transaction are interchange fees, assessments, and processor’s markup fees. Interchange fees are charged by the bank that issued the debit card to the customer. Card companies, like Visa or Mastercard, charge the assessments. Debit card processing companies, like STAR or NYCE, charge the processor’s markup.

Several factors can alter the fee amounts, like the size of the bank that issued a debit card and the type of business you own. Whether a PIN or a signature is used when a debit card transaction occurs also impacts fees.

Mobile payment processors.

Mobile payment processors, also known as Payment Service Providers (PSPs), are increasingly becoming a very popular way for small businesses to accept debit and credit card payments. You’ve probably come across businesses that use PSPs like Square and Stripe.

“Most payment service providers use a flat rate structure for pricing,” explains review site Ecommerce Platforms. “Basically, this ensures that you pay the same amount for every transaction, no matter what the card type might be. There’s no monthly fee to worry about, and other costs beyond transaction costs are usually nonexistent too.”

PSPs have become popular because setup is usually cheaper and easier than with traditional merchant account systems. Many PSPs try to charge simple, transparent fees. However, other systems may prove to be less expensive over the long run as your business scales up.

How much are debit card fees?

Debit card fees can vary broadly depending on the debit card used, your merchant category, and whether a PIN is used during the transaction. According to data from 2018, the average interchange fee was $0.23. As a percentage of a purchase, the average interchange fee was 0.57%. These averages are for both signature and PIN transactions. Assessment fees mostly range from 0.11% to 0.13% of each debit transaction. Processor’s markup fees can range from 0.75% to 0.9% of each transaction, plus $0.13 to $0.22. Some of these companies might charge businesses annual fees along with their other fees on every transaction.

What is right for your small business?

Deciding whether or not you want to accept payments other than cash is a big step for your business—but most businesses accept multiple forms of payment, as you’ve probably noticed in your shopping experiences. Knowing the costs associated with accepting cards is very important—especially if yours is a smaller business, as the costs can impact key aspects of your business (like your pricing strategy). Generally, if you’re set up to take credit cards, you should be able to take debit cards as well.

Financing a seasonal business can be tricky. You need up-front capital to prepare for the busy season, and then you need ongoing cash to keep up with mid-season expenses. Thanks to these challenges, it's difficult for seasonal businesses to rely on sales alone to fund all of their costs.

Fortunately, financing can help. With the right seasonal loan, you can cover your bases and make the most of the busy season. Get ahead of the game now by forecasting your financial needs and applying for funds in advance. 

Remember, fast cash is usually expensive cash. If you can predict your needs ahead of time, you can secure much more affordable financing.

First, let's cover a few ways you can use seasonal loans to fund your business. Then, we'll share our 6 favorite financing methods for making it happen.

How to use seasonal financing.

Whether you're preparing for opening day or keeping inventory on the shelves during peak season, seasonal financing can be a huge year-round help. Here are a few ways you can use a seasonal loan to give your business a financial advantage:

• Hire extra help: Add additional headcount to your team to serve more buyers and provide top-notch customer service.
• Stock up on inventory: Purchase sufficient inventory in the pre-season and during the busy season to keep your shelves full.
• Purchase equipment: Buy additional equipment or make necessary repairs to remove bottlenecks and maximize efficiency.
• Launch marketing campaigns: Start generating awareness before and during peak season with targeted advertising campaigns.
• Cover cash flow gaps: Take care of emergencies quickly and stay on top of all your financial obligations.

6 financing methods for seasonal businesses.

1. Short term loan.

If time is of the essence, a short term loan can get you the quick cash you need. You can get a short term loan for as much as $500,000 with terms up to 3 years, helping you stretch out your monthly payments. Plus, these loans are quick. You could get the financing you need in as little as 24 hours.

You can use a short term loan to finance just about any business expense: payroll, equipment, marketing, inventory—you name it. If you need to purchase a lot of up-front inventory or buy an essential piece of equipment, a short term loan can help you do it in no time.

2. Business line of credit.

A business line of credit is the go-anywhere, do-anything financing tool. Your lender will approve you for a certain credit amount, and you'll be able to draw from that line as often as you'd like to. 

Draw what you need, pay it back, and then get access to the funds again. And the best part is that you only pay interest on the portion you borrow—not the entirety of your line of credit. This is what makes a business line of credit a flexible and affordable financing tool.

If you know you'll need extra capital but you're not sure how much, a business line of credit can help you save money. You won't secure more than you need and have to pay off the unnecessary interest.

Use it if you need it, or keep it in your back pocket for an emergency. A business line of credit is a must-have financing tool for any company but especially for seasonal businesses.

3. Accounts receivable financing.

Just because you're making more sales doesn't mean you necessarily have more money. If you have a long cash flow turnover rate, then you likely won't see the income for quite a while, which isn't very helpful if you need money ASAP.

Accounts receivable financing (also known as factoring) lets you sell your outstanding invoices for immediate cash. A factoring company will buy your IOUs and pay you up front for 80% to 95% of the value of your invoices. Then, they'll chase down your customers for the remaining balance and take out their fees before sending you over the remainder.

Sometimes less money today is more valuable than more money tomorrow. If business is booming but your cash is tied up in accounts receivables, this can be a great way to get you the money you need to fund your busy season.

4. Cash advance

A cash advance provides you with a lump sum of cash in exchange for a percentage of your daily sales. Unlike a term loan, payments are based on your revenue (not a fixed monthly payment)— you'll have higher repayments during the busy season and lower payments during the off periods.

You can use your cash advance to finance various business expenses. Qualifying is easy—you just need to prove how much money you make regularly. However, most lenders will look at your last 4–6 months of bank statements, which might not include your previous peak season. This could hurt how much you qualify for.

A cash advance can get you cash quickly, but it's not cheap. You should only turn to a cash advances when you've exhausted your other options. 

5. Small business credit card.

You can use a small business credit card a lot like a line of credit. It'll expand your working capital to cover day-to-day expenses like purchasing supplies, making quick repairs, or even paying the overtime crew.

Small business credit cards can have extensive lending limits, too—you could secure one with a credit line as large as $50,000. The only caveat is that you'll want to spend responsibly so you can pay off the card in full every month. Don't just focus on the minimum monthly payment. Credit cards can have higher APRs, and you don't want to pay more interest than you need.

6. Equipment financing

Equipment financing can help you purchase just about any business-related asset: forklifts, trucks, furniture, software, and more. Plus, you don't need to provide any additional collateral since the equipment you're financing will suffice.

An extra cash register or blender can help you process customers faster, helping you make more sales and capitalize on the peak season. More sales now is worth the monthly expense, especially since you'll own the new piece of equipment moving forward and can sell it at a later point if necessary.

Capitalize on peak season.

Despite the long days and busy hours, most small business owners anxiously await the peak season. With the right financing in place, you'll be positioned to overcome challenges and make the most of every day.

Need help securing funding? Getting you money in the bank is what we do best. Start your 15-minute application to start exploring your seasonal financing options.

The economy is on everyone's mind in 2024, with everything from the housing market to inflation making headlines. If this has you considering your first (or next) small business opportunity, this may also have you considering financial franchise opportunities. A financial franchise allows you to open a business with an established brand presence. Even if you aren’t a CPA or licensed bookkeeper, many franchisors provide the small business know-how you need to get started.

What is a franchise?

You might think of a franchise agreement as allowing the franchisee to open up an outpost of the main business. McDonalds, 7-Eleven, Ace Hardware, and Marriott hotels are all very common franchises. But a franchise is really just a type of license agreement between a small business owner (called a "franchisee") and a bigger company. As part of the agreement, the franchisee gains access to proprietary business knowledge, trademarks, processes, products, and branding of that bigger company or franchisor.

The franchisee gets to run a business with a recognizable brand and a track record of success. The franchisor is paid in return, usually in the form of initial startup fees and annual licensing fees, although agreements vary.

What is a financial franchise?

A financial franchise is a franchise that offers services within the financial service industry. There are franchise opportunities for entrepreneurs interested in small business financing, tax preparation, bookkeeping, and more. Some of the brand names in the financial sector you know well, including Lendio, Allstate, and H&R Block, have franchise opportunities—but there is a whole universe of options.

Categories of financial franchise.

There are financial franchise opportunities across the financial-services spectrum—and ones that customers badly need. We pay taxes, we open businesses, we need financing, we pay employees, and we know everything should be insured—all opportunities for a financial franchise to assist us. 

Key franchise sectors in the financial services industry.

1. Small business lending
2. Tax preparation services
3. Accounting, bookkeeping, and payroll
4. ATMs
5. Insurance

Financial franchise services can also be combined easily into a robust business appealing to a wide swath of customers. With a Lendio franchise, for example, you can offer financing help as well as bookkeeping services.  

1. Small business lending.

A small business lending company is one of the most profitable types of financial franchise—and it’s relatively accessible to open as an entrepreneur. These types of franchises find loans and other funding for small businesses. In many cases, you don’t need to open a physical office, and you only need around $55,000–$65,000 in liquid capital to start.

2. Tax preparation and services.

Tax preparation franchises are very common forms of financial franchises—you’ve probably seen H&R Block or Jackson Hewitt franchises in your area. Depending on the company, you do not need to be a CPA or tax professional to open a tax preparation franchise, because they put you through rigorous training. Since people and businesses will always need help with their taxes, these types of franchises remain popular.

3. Accounting, bookkeeping, and payroll.

While many CPAs, accountants, and bookkeepers open their own solopreneur business or independent small storefront, there are several franchise opportunities for these roles as well. Since accounting is often the last thing entrepreneurs know how to handle, it's logical that many will outsource this factor of operating a company. You may not need to be credentialed to open an accounting franchise, but it helps to be a licensed CPA, CFA, or another financial professional.

4. ATMs

Even in this digital age, we all need cash sometimes. You can open a franchise that installs and maintains ATMs—a great way to get into a financial franchise without a huge infusion of startup capital. This type of business can be a particularly strong fit for an entrepreneur looking for flexible hours. It’s also great if you want to be on the road more and in the office less, especially if your staff is small.

5. Insurance

Insurance is a big enough business to be considered its own field, but it is technically a part of the broader financial industry. Many insurers have franchise opportunities, like Allstate and Farmers. Oftentimes, the companies provide all the training—you don’t have to already be an insurance agent to get started. Because of the field’s product diversity, you can specialize in many forms of insurance, including life, home, auto, small business, rental, and event insurance.

Best financial franchise opportunities in 2024.

First, choosing the best franchise is about finding the right one for you within the market you intend to operate. Will you be serving mostly business clients or consumer clients? Is your market already teeming with accountants and insurance providers or are there only a few options available locally? Do you want to invest in a storefront or would you rather focus on something like small business lending, where you may not need a storefront, the initial fees are relatively low, and you can leverage your existing business network for success?

Because every situation is different, consider the following questions when deciding which franchise is best.

• Why are you interested in starting a franchise? Do you want to be hands on with the business? If so, ensure it's a franchise that you find interesting. If this is this your first and only business, you may be able to commit more time to it than if it's another business you're adding to your portfolio.
  
• How much liquid capital do you have? Most franchise opportunities disclose up front the capital you'll need to invest.
  
• What does your market look like — particularly in terms of competition? The best franchise is usually the one with the best chance to succeed within the market you intend to operate.

How do you get franchise financing?

To get financing for a franchise, you need to ensure that you qualify for both the franchisee agreement and the needed financing for such a business. There are online platforms to help you determine what financing you are eligible for.

What is the most profitable franchise to open?

Fast food franchises, like McDonalds and Dunkin’, are often the most profitable for franchisees. The UPS Store or Anytime Fitness franchises are also known for being profitable. The most important factor, however, should be your interest: think about your passions, and let that lead you to a franchise opportunity that works for you. If your passion is helping people grow or run a business, a Lendio franchise may be a good option. If you’d prefer to work with vacationers, consider hotels, t-shirt shops, or restaurants. Like kids? You may be interested in a childcare franchise or a children’s boutique. In addition to aligning with your own interests, your franchise will be more likely to turn a profit if it fits the physical location (note that some franchises, particularly in the financial services sector, may not require a physical location).

What is the cheapest franchise to invest in?

While many of the most popular franchises require a hefty amount of capital to open, there are dozens of franchise opportunities that require an investment of fewer than $15,000 to open. Some only require an initial fee of $10,000. For about the cost of a used car, you can open up a Jazzercise, Complete Wedding and Events, or Building Stars franchise, for example.

Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.

In a world where gender equality is a constant topic of discussion, it's essential that we do our part to uplift and support women in business. Women entrepreneurs bring a unique perspective and innovative ideas to the table, and supporting them isn't merely a moral imperative—it's a strategic one.

There are many ways we can make a difference, from investing in women-owned businesses to mentoring aspiring female entrepreneurs. In this post, we will discuss five actionable ways you can support women entrepreneurs. So, whether you're a seasoned business owner, a budding entrepreneur, or someone looking to make a difference, read on to find out how you can contribute to this critical cause.

1. Seek out women-owned businesses online and in-person.

Perhaps the most important way to show support for women entrepreneurs is to be committed to seeking them out. “We can support them by being conscious of how we are spending our money and intentionally supporting women-owned businesses, says Wendy Muhammad, a real estate developer.

Making a conscious effort to like and share information about a women-owned business on social media is another way to show your support. Exposure is critical and explains why companies spend so much on advertising—and why they spend more on social media than other advertising mediums.

However, B. Michelle Pippin, owner of Women Who WOW, stresses that social media amplification is not as important as making a purchase. “One popular saying is, ‘Even if you can’t buy from her, hitting like or making a comment costs nothing,’ and this is true.” But the problem with that strategy, according to Pippin, is that liking or sharing an entrepreneur’s social media post isn’t putting money in anyone’s pocket. “The women entrepreneurs I work with every day aren’t ‘playing business’—this is how their families are supported financially.”

One interesting fact about women founders: there’s rampant gender disparity in funding.

So when you can, it’s important to actually buy a product or service. And if you can’t buy something yourself, Pippin recommends introducing women entrepreneurs to people who can.  

2. Make it easier to find women entrepreneurs.

Social media makes it easier to find women-owned businesses, but according to N. Damali Peterman, Esq., founder and CEO of Breakthrough ADR, this should extend beyond likes and shares by consumers. “For example, companies and influencers should highlight women-owned businesses in their networks and on their social media platforms,” she explained. “Online retailers like Amazon should have a symbol or identifying mark that indicates if a product is a woman-owned brand.” Peterman says she’s often been in a physical store trying to decide between 2 similar items and made her decision based on the “Woman-Owned” logo on the packaging.   

3. Share experiences

The sisterhood of women entrepreneurs can create a level of support that is mutually beneficial. “Meet each other on Zoom, connect via email, write content that expresses how you are experiencing the pandemic that can be shared,” recommends Deborah Sweeney, CEO of MyCorporation.

“Being a strong steward of information and your experience can be a great way to help other women and to connect.” In fact, when Sweeney writes an article or shares an experience, she often receives feedback from women. “This feedback helps me improve and learn, and others can receive takeaways that can help them.”

4. Collaborate 

Another way to show support for women entrepreneurs is to collaborate with them. Talia R. Boone, founder and CEO of Postal Petals, looks for ways to work with other women and support Black business owners to help them grow their respective businesses. “For example, on Friday on our social media platforms, Postal Petals celebrates #BlackFloristFridays.”  

However, she says it’s those collaborations with larger companies that can help change the trajectory of a small business. “Seek out opportunities to partner with and hire services of women-owned businesses,” Boone advises.

Her advice is seconded by Muhammad. “If you have a business, make women-owned companies one of your stakeholders, and make it a point to hire services providers, for example, who work for women-owned businesses,” she says.

Collaboration can also take the form of offering business discounts. “My company has a Let’s Grow Again! plan that provides startups and small businesses discounted rates for public relations and SEO services,” explains Lisa Porter of Porter PR & Marketing. The goal is to give companies a hand so they can get back on track without the added stress of wondering how they can pay for marketing. “My company got plenty of help when we started, and now it’s time to give back,” she says.

5. Provide mental support and mentorship.

Being a woman entrepreneur is exciting, but it can also be frustrating and mentally draining.  

“If you have a woman in your life who is leading a small business, you can support her by encouraging her to evolve, adapt, and expand with the changing business landscape,” advises Bri Seeley, business growth advisor and entrepreneur coach. “Encourage her to look beyond what her business has been and to begin looking at what it could be.”  

Sometimes, that’s hard for women to do when they’re struggling to stay afloat while juggling numerous other roles at home. “The best way to help women entrepreneurs is to provide mental support to lift them up when they hit challenges,” says Charlene Walters, MBA, PhD, entrepreneurship coach, business branding mentor, and author of Launch Your Inner Entrepreneur.

“Female founders will continue to hit obstacles—it's a part of the game, and the important thing for them is to be able to regroup, come up with Plan B, C, D, etc., find the silver lining and not take setbacks or failure personally.”   

If you’re in a position to mentor women entrepreneurs, you could help them learn from your mistakes and avoid unnecessary pitfalls. “The easiest way to help them is by purchasing products, but mentoring women business owners will have a more lasting effect on their success,” explains Amy Edge, who specializes in operations and project management for entrepreneurs. “If you have the resources and skills to do so, share your expertise with women who are looking to get into business.” 

Conclusion

There are a lot of ways to help women entrepreneurs, so If you’re on the sidelines, the most important thing is to get involved and do something—not just for women but for the economy in general. “If small businesses are the backbone of the economy, women entrepreneurs are the skeletal system that holds everything together,” says Peterman.   

Lendio is committed to supporting women in business by offering tailored financial solutions. Learn more about business loans for women.

Acquisitions are a key part of business. A small business can be acquired by a larger company and reap the benefits of a bigger and more established infrastructure. However, that same small business can also go through an acquisition where it is dissolved entirely. 

There are multiple types of acquisitions and different reasons for each. Here are 4 common acquisition types and why they are used in business. 

1. Vertical acquisition

One of the most common types of acquisitions is the vertical model. In this case, a company buys another that falls in a different place on the supply chain. The acquisition will either be for a company higher or lower in the manufacturing process—hence the vertical reference. 

For example, instead of an ice cream company buying milk from a dairy farm across town, it could acquire the farm itself. This turns an expense—milk buying—into a new revenue stream. 

There are multiple reasons why companies opt for vertical acquisitions. First, it’s easier to acquire a company than to build a new one.

Using the ice cream example again, it’s faster to buy a fully functioning farm than to look for land, cows, equipment, and expertise. With the amount of time and planning it takes to start a business, it’s also likely cheaper to buy a company than to build one. 

Buying firms along the supply chain also means companies will save money in the long run. Let’s say it costs a farmer $2 per gallon to produce milk and he sells the product to an ice cream company for $3 per gallon. By buying the farm, the ice cream company can receive their milk without the markup. They might also optimize the infrastructure to the point where it only costs $1.75 to produce a gallon of milk.   

Companies don’t just buy down the supply chain—they might also look to buy higher in the manufacturing process so they can profit from selling products instead of just materials. 

Vertical acquisitions make companies more independent of market trends and vendors because they don’t have to turn to outside suppliers to make their products. 

2. Horizontal acquisition 

A horizontal acquisition doesn’t have anything to do with the supply chain. Instead, it refers to companies acquiring other firms in their industry—companies that offer similar or the same products. When Facebook acquired Instagram, it was a horizontal acquisition. Both companies were social networks for people to connect, share, and promote themselves. 

Horizontal acquisitions are often created to eliminate competition and quickly increase market share. If there’s another company that people are excited about that poses a threat to your business, you can eliminate the threat by buying them. If you can’t beat them, acquire them.

The main challenge of horizontal acquisitions is that they may pose antitrust threats to American citizens. When one company buys competitors, it can eventually lead to a monopoly. You can see examples of antitrust laws in the purchase of Sprint by T-Mobile last year or the desire for Staples to buy Office Depot. 

The Federal Trade Commission (FTC) oversees antitrust laws to make sure the American people are protected. This way, consumers have options and a sense of free market exists. It prevents a single company from acquiring all of its competitors and controlling supply and prices.

3. Conglomerate acquisition

A conglomerate acquisition occurs when one company buys another from a completely unrelated industry. For example, if our ice cream company decided to purchase a brewery. 

There are multiple conglomerates in the United States, and you might not realize that some of your favorite brands are all part of the same umbrella.

For example, Procter & Gamble is the company behind the Oral-B line of dental hygiene products while also selling Tide laundry detergent. Mars, Inc. is known for candy bars like Snickers or Twix but also operates Pedigree dog food. 

Typically, companies take steps to become conglomerates as a way to protect themselves from market fluctuations. If you own multiple businesses, then it’s unlikely that they would all lose money at the same time. If for some reason people stop buying Tide products, Procter & Gamble can still make money from the other arms of its business. 

As far as the smaller companies are concerned, the acquisition gives them stability. They don’t have to operate as a small business anymore and can tap into the resources and expertise of their new parent company. 

It’s hard for conglomerates to become monopolies because they would have to own almost every significant business within an industry rather than several businesses in a variety of industries. 

4.  Market extension acquisitions.

This option is similar to a horizontal merger in that the 2 companies are in the same industry. However, they are not competitors because they are a part of different markets.

For example, a company that sells the dominant product in the United States might acquire a similar company that is dominant in Germany. The German company might continue to operate as it always did, except it will be owned by an American firm. 

This acquisition is often meant to absorb the competition before it poses a real threat. Instead of competing with a brand that is trying to enter your market, you can keep them at bay with an acquisition.

From a proactive standpoint, market extension acquisitions can help companies enter new markets without having to compete with existing brands. They also won’t have to waste time and money on building up brand recognition. 

Know your mergers.

Different acquisitions provide multiple levels of change for companies. When one company buys another, it may want to let the purchased organization continue to run on its own. However, some companies buy up competitors with the sole purpose of shutting them down. 

Understanding the acquisition process, different acquisition types and the relationship options of business mergers is important for business owners being acquired and also for companies looking to acquire other businesses. In the process of acquiring a company? Learn more about business acquisition loans. 

New year, new plan. If 2024 is the year of "increased sales" for your business, you can jump-start your goals with these 4 simple action-items.

Action item 1: find your niche.

Creating useful, memorable products or services that offer unique solutions to customer needs is no easy task—but it’s one of the most important principles for sales growth. What sets your business apart from the others in its category? Maybe you’re the first salon for curly haired clients in your neighborhood. Perhaps you’re the only landscaping company in town willing to work through all 4 seasons. Or, you’re the one bakery in the neighborhood serving my favorite Scandinavian pastries. Whatever the niche, once you can clearly visualize the answer to this question, find creative ways to communicate it to your customer.

Utilizing social media can be a powerful way to convey your small business’s niche to your customers, new and returning alike. Partner with like-minded small business owners to spread the word, as the company Omsom—makers of “loud, proud” and utterly delicious East and Southeast Asian sauces and recipe starters—does with their “tastemaker” program. These talented chefs serve as virtual brand ambassadors for Omsom’s offerings, spreading the word about their unique products and lending them credibility through their work as restauranteurs.

Ensuring that you have a unique product or service like Omsom’s—and knowing how to describe what makes your product or service remarkable—is a critical tool to increasing sales and improving your place in the market. Ultimately, if you can’t differentiate your product or service from everyone else who offers something similar, your business will struggle.

Action item 2: Increase the upsell.

A sales professional once told me, “There are 2 ways to increase sales within your territory: find more customers, or get the customers you already have to buy more.” Once your customer is in the door—or on your e-commerce site—convincing them to combine or add items to their purchase should be a foundational part of your sales pitch to them.

What’s the best way to convince customers to buy more? Personally, I’m a sucker for the latte-upsell, but that may not work when my furnace is on the fritz, unless the repair van doubles as an espresso truck. An air-duct cleaning or annual maintenance plan that helps me prevent another emergency repair, however, might.  Free-shipping thresholds and bundled product sets with discounts, like my favorite e-commerce skincare site Glossier offers, can be a great way to attract online shoppers to add more to their carts.

In person, it’s all about the impulse buy. Next time you go through the checkout line at your favorite local market, notice the candy bars, gum, news magazines, and other miscellaneous items designed to get your attention. Successful merchants in any business are always trying to use these last-minute add-ons, once you’re already in line to pay, to “add to the invoice.”

Action item 3: bring customers back.

Although I sometimes lose track of punch cards, I use them—what’s better than a free sandwich or pastry? Even better, virtual punch cards or app-based points systems motivate me to shop at my favorite retailers, knowing that I’ll earn some free treats or cash back with my customer loyalty without overflowing my wallet.

However, the best way to reward frequent customers is with what’s called a “surprise and delight”: an unexpected free treat or discounted item to reward them for their loyalty. When my neighborhood bakery threw in an extra croissant for my spouse—for absolutely no reason— I knew I’d be back for more. Perhaps for your company, this means waiving a consultation fee after a customer signs a contract for service or throwing in a travel-size hairspray at no cost after a cut and color.

How can you entice your returning customers to become regulars? Customer service, whether online or in person, is key to building lasting relationships with your customers—and increasing sales as a result.

Action item 4: make friends with your neighbors.

Look around: you’ll find other businesses in your area that cater to the same type of customers you’re looking for. For example, a photography studio could partner with a flower shop or event venue to offer bundles to prospective newlyweds. A dog-boarding center could sell another area business’s homemade dog treats and toys. Returning to my beloved bakery, their commitment to fellow local businesses introduced me to other shops and services in the neighborhood. I even have a plant from the same shop as the one in their window, and I shop there any time I need a new one.

The beauty of building these symbiotic relationships with other local businesses: because you work in different parts of the same industry, your customer base probably overlaps. Look for opportunities to form strategic partnerships—or alliances—that are mutually beneficial. Best of all, these types of synergies are good for customers, too.

_{The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. Any content provided by our bloggers or authors are of their opinion and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything. The information provided in this post is not intended to constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.}

If you don’t have the best credit but need to buy equipment for your business, rest assured that there are options at your disposal. While you might have to do some research and take some extra steps to get approved, you can lock in an equipment loan with a less-than-perfect credit score. Here’s everything you need to know about securing equipment financing with bad credit.

Can you get equipment financing with no credit check?

Lenders will check your credit score as part of the process of securing equipment financing. But don't let this deter you! Remember, your credit score is just one piece of the puzzle. Lenders also consider other factors about your business. So, even if your score isn't perfect, it doesn't mean you're out of options. 

Why equipment financing requires a credit check.

Your credit tells lenders how likely you are to repay what you borrow. If you have bad credit, they’ll view you as a risky borrower and may be more hesitant to lend to you. The good news is that many lenders have lenient requirements and serve borrowers with bad credit. 

These lenders often consider other factors like your annual revenue, profitability, cash flow, and outstanding debt when deciding whether to approve you for an equipment loan. Keep in mind, however, that if you have a bad credit history you might have to settle for a higher interest rate or make a larger down payment than a business owner with good or excellent credit.

Bad credit equipment financing options.

The following lenders offer equipment financing with minimum credit score requirements of 600 or below.

How to increase your chances of approval.

If you have bad credit but need to borrow money to fund the cost of your business equipment, certain strategies will boost your likelihood of locking in construction and heavy equipment financing, restaurant equipment financing, and other types of business equipment financing. Here are some ideas to consider.

Apply with Online Lenders

Compared to traditional lenders with brick-and-mortar locations, online lenders are usually more flexible. You’ll find that they are often open to lending to borrowers with less-than-perfect credit scores. Do your research and find several online lenders who specialize in bad credit equipment financing. 

Consider Equipment Leasing

It’s important to understand equipment financing vs. equipment leasing. By doing so, you can decide whether equipment leasing makes more sense for your unique needs. With an equipment loan, you make a down payment and finance the rest of the equipment cost. 

An equipment lease, on the other hand, lets you rent and use the equipment for a specific period. While most businesses return the equipment at the end of the lease, some decide to buy it at fair market value or explore other options outlined in their agreement. 

Offer Additional Collateral

In a typical equipment loan, the equipment itself serves as collateral. Since the lender can seize it if you default, they take on less risk. If you have bad credit, you might want to offer additional collateral, like your commercial vehicle or inventory, to help secure the loan and reduce risk for the lender. Just make sure you feel confident that you’ll be able to repay what you borrow or you might lose a valuable asset.

Increase Your Down Payment

The larger your down payment, the smaller the loan you’ll need to cover the cost of your equipment. If possible, save up for a hefty down payment so that lenders are more open to lending to you with bad credit. Not only will a larger down payment position you as a more attractive borrower, but it can also save you hundreds or even thousands in interest fees and lower your overall cost of borrowing. 

Perfect Your Business Plan

Your business plan is an important document that shows lenders who you are and what you plan to do with the funds. Take the time to look over and improve your business plan so that it accurately reflects your business acumen and clearly highlights how an equipment purchase will help your business. 

Apply with a Cosigner

A cosigner is someone with strong credit, a stable income, and significant assets. If you apply for an equipment loan with a cosigner, lenders will consider their financial situation in addition to yours. This can increase your chances of approval and potentially lead to lower rates and better terms. However, the downside of this strategy is that, if you don’t make your payments, the cosigner will be responsible for them.

Equipment loans for bad credit are available.

Don’t let bad credit prevent you from locking in the equipment loans you need. With a bit of creativity and patience, you can qualify for equipment financing with bad credit. As long as you choose a lender who reports on-time payments, an equipment loan can also give you the chance to improve your credit. Best of luck in your search for bad credit equipment financing.

*The information contained in this page is Lendio’s opinion based on Lendio’s research, methodology, evaluation, and other factors. The information provided is accurate at the time of the initial publishing of the page (January 2, 2024). While Lendio strives to maintain this information to ensure that it is up to date, this information may be different than what you see in other contexts, including when visiting the financial information, a different service provider, or a specific product’s site. All information provided in this page is presented to you without warranty. When evaluating offers, please review the financial institution’s terms and conditions, relevant policies, contractual agreements and other applicable information. Please note that the ranges provided here are not pre-qualified offers and may be greater or less than the ranges provided based on information contained in your business financing application. Lendio may receive compensation from the financial institutions evaluated on this page in the event that you receive business financing through that financial institution.

The Employee Retention Credit (ERC) was launched by the federal government to provide financial relief to small businesses that kept employees on the payroll throughout the pandemic. The credit is available for the 2020 and 2021 tax years, and eligible businesses may retroactively apply using IRS Form 941-X.

Key takeaways

• The deadline for all 2020 filings is April 15, 2024. On average, 2020 quarters make up a total of 20% of the eligible credit dollars available to small businesses and 30% of the ERC credit amount small businesses qualify for.

• Applying and filing for the ERC takes time. If you are applying for ERC and you want to beat the deadline we recommend you apply by February 15, 2024, to allow ample processing time. (While we can often get your credit processed much quicker than this, some accounts require extra due diligence and back and forth).

• To reserve your spot in line with the IRS your business must have all revised payroll tax forms for 2020 quarters postmarked and in the mail to the IRS prior to April 15, 2024.

• The filing deadline for all 2021 filings is April 15, 2025.

Employee Retention Credit deadlines.

The ERC is not available for tax years 2024 and beyond, but you can retroactively apply if you haven't yet taken advantage of this credit. Businesses could receive a credit of up to $5,000 per employee in 2020 and $7,000 per employee per quarter in 2021. So it's definitely worth paying close attention to the deadlines to make sure you don't miss out on this opportunity to significantly lower your tax bill.

Each tax year has its specific deadline. This gives you time to focus on one application at a time since each tax year requires its own form to support the different eligibility requirements. 

ERC deadline for the 2020 tax year.

The Employee Retention Credit deadline for the 2020 tax year is April 15, 2024. This applies to all three eligible quarters: Q2, Q3, and Q4. The first quarter doesn't count since COVID-19 mandates didn't begin in the U.S. until the end of the first quarter. 

ERC deadline for the 2021 tax year.

The ERC deadline for Q1, Q2 and Q3 for the 2021 tax year is April 15, 2025. This gives you time to gather documentation for a robust application. But it's still smart to apply as soon as possible, especially since the IRS is reporting a backlog in reviewing applications. In other words, the sooner you apply, the sooner you're likely to get approved and receive your credit funds (or have them applied to an outstanding tax bill).

Overview of ERC eligibility.

Before applying for the Employee Retention Credit, make sure your business qualifies for 2020, 2021, or both. The basic eligibility criteria vary from year to year.

For the 2020 tax year:

• No more than 100 employees
• A government mandate prevented operations, either in hours or service capacity, OR revenue was less than 50% of 2019 gross receipts

For the 2021 tax year:

• Fewer than 500 employees
• A government mandate prevented operations, either in hours or service capacity, OR revenue was less than 80% of 2019 gross receipts

Newer businesses may also qualify for the ERC as a recovery startup business. In order to qualify, your business must meet the following requirements:

• Began after February 15, 2020
• Annual gross receipts under $1 million
• One or more W2 employees 

How to apply for the ERC.

Lendio is here to assist small businesses with their ERC applications. We can help you quickly streamline your application with a step-by-step guided form that removes all the guesswork from the process. In fact, to date, our tax partners have helped Lendio clients collect over $300 million from the ERC program.