Segment 4 - Best Starter Debt Deal: Microloans
One of my favorite sources of low cost funding for small projects or seemingly larger projects is what's called microfinance loans sometimes just called micro loans now you don't hear about them and it's unfortunate, but yet they're available in every state in the united states I know we have a lot of people tuning in from europe in canada unfortunately these resource is that we're going to be highlighting here are for us based businesses alone so loans five hundred dollars a lot of big corporations big banks they don't want to go through the process of lending you five hundred dollars we'll say here's a small business credit card but here are these other sources that you can borrow money as little is in some cases maybe two hundred dollars for a rate lower than small business credit cards isn't that worth knowing about? Plus many of these resource is across the country also provide free or low cost business planning assistance, coaching sales, coaching a broad range of services just f...
or you they want you to succeed so so often I hear business owners across the country say you know what? Nobody cares about me I'm just the little guy well, microfinance organizations across the country do care about you because they on ly serve businesses like you they don't want to hear from the big monster company they want u s clients gosh isn't that wonderful lower credit scores so if you've had prior bankruptcy, low fico credit scores blips on paying your own personal bills. This, I would say, is one of the lowest cost ways to reassess. Establish your credit, you take maybe five hundred dollars loan, pay it back. What does that do that starts changing your credit history, all for a low cost money going into your business? And again of I can emphasize enough the value of personal coaching services. I do a tremendous amount of pro bono coaching services for microloan organizations in the pacific northwest and in some other areas, so people like me want you to succeed and were there for you, let's find out more about them. Where are they? As I said, they're in every state now on this chart, I was not able to put names of resource is in every state, but they are in every state, some big leaders. I think we had a comment earlier from a woman saying nobody cares about may for women. Well, in wisconsin, there is the women's business center. Now maybe you're not located and want wisconsin, but that just gives you an example of the diversity of types of resource is out there for you. Axiron is a pioneer in microfinance there, but located in new york and boston in texas, you can go online and find out where some of those closest re sources are to you at my own website start on purpose we list microfinance resource is across the country you can also turn toe espy a dot gov for not an entirely fullest but some of the partner microfinance sites that work very actively with the small business administration so that's s be a dot gov or again through start on purpose I really care about connecting business owners to the right sources of cash but look all around the country rocky mountain microfinance actually on again in california lots of wonderful resource is and this is where when we open up to the audience microfinance maybe that perfect funding partner for somebody who wants to buy a new piece of photography equipment suppose somebody wants to start a new fashion business and needs a couple of sewing machines or searchers this is a great resource is not the on ly resource that we're going to talk about for financing equipment but I'm saying this should be on your list because it is low cost and it is geared for start ups so even if you don't have customers today I'm saying microfinance lending resource is appreciate that position and we'll help you by providing you the right amount of money to help your business grow it maybe through a micro finance organization where you borrow five hundred dollars first you advance a bit you borrow three thousand dollars next time you borrow ten thousand dollars next time I think the average loan a taxi on is something like twelve thousand dollars, so don't assume oh it's too small for what I need check it out be that shopper primarily you will find microfinance organizations that on ly invest in this state we're going to be highlighting some other sources of capital where if you live in rhode island you can go to massachusetts for money in most cases because it's part of a community development initiative where states one small business owners to thrive and employ more people for the most part a micro finance organization will only fund businesses within that state but there's an exception axiron has a program where they through their online tools will lend to big qualify businesses all across the united states and there are a couple of others like that, so please add microfinance organizations to your list now I'm got a caveat. There are some snaky finance companies out there who are calling themselves microfinance lenders now they are finance companies and they are offering micro loans but and as we learn in this segment, they may be using that term because the hair people like me who advocate these great resource is but then they're going to give you a very different type of deal, so be cautious about the word microfinance some people are capturing onto that and taking advantage of all the goodwill that people generate by this terrific loan low cost loan program options for small businesses are starting up businesses questions about this how many people ever heard of microbes loan companies you've heard about it? Have you ever thought of turning there for your own business? Why is that? Because sometimes people assume it is on ly set up in areas for poor women or in inner cities or in rural areas but now there's growing diversity in microfinance organizations where many of them do far more than that, so don't assume that they're not right for you I'd rather have you check it out, especially since I'm saying you're likely to find lower cost interest rates and maybe no origination fees and other things that may be a part of other types of debt in america. Any news from any what are people saying online about this let's start getting some comments coming back and people are sharing you know what they're looking for cash is claimed to clarify what did you say? I was the lower limit for axiom um I want to say five hundred dollars, but it may be even less than that it may be less than that, I think with most microfinance organizations like to d'oh is matched the right dollar amount for what you're trying to dio and what you can handle and then grow with you cashes clay is asking what specifically do micro loan funders look for in your application on dh where will you make sure you get clarity on pay back terms ok? And they'll provide and some of them are very flexible, so providing repayment terms that you can work with they don't want people to fail, so number one you need to have a business reason aa lot of times because I've seen the applications that some microfinance organizations I volunteer at where people say, you know what? I just need five hundred dollars to pay off my credit card debt. No, what we want is money to go into the business for you to either buy something or build something it really is you the borrower but for a business purpose that's number one so you know what you're going to say and how you're going to use those funds is the starting point for getting a microloan number two? Do you need other things? Are you equipped to sell customers? What are some of the other factors that you might need to be successful in your business initiative? Sometimes microfinance organizations may sense you know you're not strong and sales maybe you should sit in on this sales class so they really want a partner the right education for what you're doing plus providing the loan these are organizations that really are motivated and find success in your success, not g how much have we booked? How many? How much have we made off of you it's a very different kind of outlook and environment in these mike finance organizations like you. Any questions here for not coming? Ok, help. I need fast cash. I guarantee that pretty much anyone in business will get snookered and forget that they have payroll taxes or all of a sudden they find out somebody in the organization has made a big order for something from a vendor. All of a sudden cash is tight. You may only need a thousand dollars or two thousand dollars. Where do you go? Where does everybody reach first they start with the credit card or they turn for a payday loan that may be masquerading under a different type of organization where they say business loans right and online there are a growing number of re sources that say you need some business cash come here. Okay where shoppers for cash let's size up if you have that emergency thousand dollar need where you have to pay somebody fast cash or me payroll where do you turn? Okay let's talk about two types of credit cards first, when you sign up and get your business checking account there is a very good chance at your bank they're going to now push a paper in front of you by the way, would you like our professional credit card and we can put your logo and your business same on your credit card. Won't that impress your clients? They're going to push that on you or you can use your own personal credit card what's my recommendation, black and white. I want you to say, you know, to the professional business card I'd rather have you used a personal credit card. I don't care if you two personal credit cards no to the credit card that has your company logo on it. Why am I so insistent, it's very rare that I am black and white and say no, don't go said no, don't go on the four one k and ira robbing your retirement savings to invest in your business I'm saying no, don't go on the professional business card here's. Why remember a couple years ago, there was the consumer new credit card protection act that made it illegal for credit card companies or sponsoring issuer banks to raise your interest rates at any time? For whatever reason, those initiatives do not apply to business credit cards. Some banks may say, oh, no will will allow that, but chances are no, they don't meet those obligations, and they were not required to so at any time your interest rate if you take a thousand dollars from a professional business credit card versus a personal credit card you think maybe you're paying four percent maybe you're paying eight percent maybe you're paying twenty it could rocket to twenty eight percent and you could have been paying your bill faithfully suppose there's a credit rating change suppose they find that people in your zip code are not paying their bills suppose they just need more profits at any time they can change the cost of cash so what do great shoppers do they say no bad deal no deal stay with your personal credit card you have better control of the fees and interest rate that is a great way to plan your cash right you are in command of your business you want to eliminate surprises isn't that shocking knows your bank never said by the way there's a reason why we're pushing this on you and if you're like may I get those credit card applications for different you know businesses I run in the mail all the time and they will flood you if you're thinking of starting a new business once you set up a business bank again you will get flooded with him why? Because you're more profitable to get you into the business credit card than the personal credit card so here's what you do did number one keep your get too personal credit cards one for your business expenses and one for your personal expenses if you have a business credit card rip it up don't use it unless you're paying the bill outright by the end of the month, you could end up paying a whole lot more. Great shoppers never agreed to pay more than they have tio or ever want to take the surprise out of your business. What does everybody think about? Did you know about this now, just say no. Walk away. That deals not right for you.