Starting a Business with Bad Credit

May 19, 2014 | By Michael Gillen

Coming up with an idea for a business can be hard, and putting the necessary work in can be daunting. But, where do you get the money? Well, if you have less than perfect credit, it can feel impossible? Since the economic downturn, banks are much more restrictive on whom they turn to, so getting a business loan for your startup requires more work than usual. However, like everything in life, you do have options.

The first thing you can try, which seems obvious but very few people actually do, is turn to friends and family for a loan. You may not feel comfortable asking for a large amount from one person, so, it could be best to break it up as a lot of little loans taken out from a large network. You may feel uncomfortable, but this could be the easiest

The next thing you can try is rebuilding your credit. If you have the time, one of our parts, Accion, offers what they call a "Credit Start/Promesa Loan" which is designed specifically as a short-term, small loan that you can pay back so that your credit score can be established or improved. A loan like this, once repaid, can increase your credit score significantly.

Another option available for you is finding an investor for your business. Working with an investor has its pluses and minuses. First of all, an investor will own part of your business forever (unless you buy them out), which means that, unlike a loan, they will have a say, and will become more of a business partner. This could mean free advice, but it would also mean less control. Ever see the show Shark Tank? It could be like that, although probably a bit less dramatic. If you want an investor, a great place to start is this list of New York-based angel investor groups.

If your credit is okay, but not good enough for banks, there are non-profits out there that will make a loan to you. They all offer different loans with different requirements, so the easiest way is to navigate them is by making an appointment with us and going over your unique situation and finances.

The last way I'm going to talk about today is crowdfunding, where you raise money through the Internet. Basically, you put your business idea on a website and people around the world each contribute small amounts to make a large loan to you, usually at zero interest. One of the newest crowdfunding platforms is Kiva Zip, which QEDC is working with now. Kiva Zip requires a trustee, so, if you would to try it out, please fill out this form and we'll start working on it together.

So, do you feel that you can get money for your business? Remember: the first step is always making an appointment!

Want To Rank First in Google? Get In Line

Apr 15, 2014

Google. The giant. Almost every client with which I work asks me how they can be found on Google, rank better on Google, get to the top of Google. The benefits to achieving this are, of course, obvious. If you sold shoes, and every person that put "shoes" into Google saw your website, you would be making money hand over fist. I have even known of companies that were purchased simply because of how well they rank on Google. It's a big deal.

Achieving it, on the other hand, is more complicated. First, let's discuss how Google decides what websites to show when it makes the search. Basically, Google has a catalog of the entire internet. It reads the words on your website, and then it reads the words on the websites that link to you, especially the words in the actual link. It also assigns a grade to each website, so getting a link from one website could cause you to get more "points" to your ranking than another. The one with the most "points" go first, the one with the second most goes second, and so on. It's a bit more complicated and it actually takes many other factors (your social media presence, how quickly your website loads, etc), but this is the main one.

Now, for many years there has been a service called "Search Engine Optimization." Basically, it's a job devoted to making your website rank better. They work with the content on your website, as well as getting good websites to link to you, so that you can rank better.

This used to be significantly easier than it is now. Google does not like its rankings being manipulated, and so over the years they have improved the way their search engine algorithm works so that won't be affected by the common "tricks" that SEO companies relied upon to make their clients rank well; in fact, they now actually punish websites they feel are trying to unfairly manipulate their rankings. You could see your position drop or, even worse, your website could be removed from Google altogether!

So, do you still want to be first on Google? Of course you do! Now, it is very difficult to do it alone, so many people end up hiring a search engine optimization company in order to help them. Unfortunately, this field has a tendency to attract a large number of scams. To help you cut through the scam artists, I attached a list of warning signs that, if an SEO company says, should make you take warning:

  • They'll submit your website to search engines: your website will be found by Google naturally, so there's no reason to submit. This is a worthless "service" designed to make it look more impressive.
  • They give you a very short timeline: SEO is a complicated process. Anyone who says they'll get you where you want to be in a week, they're lying.
  • They talk about "optimizing your keywords tags:" Google has stopped reading keywords tags years ago. It's just a quick fix people use to trick you to think they're doing more work.
  • They don't want to make changes to your website: Chances are, your website is not optimized the best for search engines (how could it be if you don't know how to do it?). If they're doing things you can't see, they're probably not doing much of anything.
  • They don't tell you how they're getting you links: Companies often say they have proprietary secrets, and they certainly won't reveal everything, but if they're completely silent on it, they're probably doing something shady. Ask them what their strategy is.
  • They promise too much for too little: No, you're not going to be the number one on Google for "shoes" for a one-time $300 fee. If it sounds too good to be true, it is.

Of course, these are just guidelines. When in doubt, go with your gut. Try to see if they have other clients and contact them. Make sure it's somebody you're comfortable. Real SEO is a long-term relationship with a lot of money involved, so you need to be sure that this is somebody who can you work with.

Can I Get a Grant for My Small Business? The Hard Truth

Feb 18, 2014

Short answer: No.

Long answer: Contrary to what you have heard, unless you work in very specific industries doing very specific things, there are no grants available for your new business. The SBA states very clearly on their website that they do "NOT provide grants for starting and expanding a business."

So, what are these businesses or areas that are eligible for grants? Well, if you engage in scientific research and development, there may be grants available. Also, as per the SBA, there may be local or state grants available for businesses that are "expanding child care centers; creating energy efficient technology; and developing marketing campaigns for tourism." However, in these cases, it's rarely free money: usually they will match whatever money you raise for your business.

Despite this, the SBA does offer a Loans and Grants Search Tool to find grants available for your business, though it is limited and very specific. While there are always new programs, if you're looking for a grant to cover initial expenses, market your business, or build a website, your possibilities are limited.

So, with all that said, what is a budding entrepreneur to do? The answer is that you will take one of three courses, ranked from the most to least common:

  1. Take out a loan for your business
  2. Attract an investor
  3. Win a contest (such as QEDC's StartUP competition)

Of the three, only the third can be considered anything close to "free money." There are numerous competitions throughout the country and you can use to find them. But keep in mind that most competitions have strict entry requirements; for example, many are linked to schools and you have to be a student of that school to compete.

I did a quick scan of the competitions and some of them could be useful. If you live in Manhattan, the Bronx, or Staten Island, you can enter the New York StartUP! Business Plan Competition. If you're starting a business hoping to solve one the world's most pressing social, environmental, or economic threats, you can apply for the Buckminster Fuller Challenge. We think it would be great for you to check out all contests that are available for you, but, you shouldn't rely on it; plenty of people lose these contests and still launch fantastic businesses and, if you want to be one of them, you need to have a backup plan.

What should your backup plan be? For most businesses, it's going to be getting a loan. There a variety of options available for a person wanting to start a small business including:

What is best for you will depend on a variety of factors, including your credit score, if you have any collateral, how much money you need, and whether you're a startup or an existing business. Finding out what is the best for you can be tricky, which is why we're here! If you need money for your business, please make an appointment and we'll help you find out what's best for you!

It's the End of the Year...Maybe

Dec 18, 2013

Although they're not due yet, December is often the best time to start preparing what you need in order to file your taxes. Many businesses slow down in late December, so this is usually a great opportunity to get a jump on it so you don't have to rush when it's due.

However, for many businesses, your "year" doesn't end on December 31st. Your fiscal year, the 52 to 53 week period where taxes are assessed, may not be the same as the calendar year, although for many it is the same. If you don't know, check with your accountant. However, in the following cases, you're required to use the calendar year as your fiscal year:

  • You have previously filed using the calendar year and later begin business as sole proprietor, as part of a partnership, or becoming a shareholder in an S corporation. This can only change with express IRS approval.
  • Your business keeps no books or records.
  • You have no annual accounting period.
  • Your present tax year does not qualify as a fiscal year (More on this below)
  • The IRS tax code has a special provision which requires you to use the calendar year as your fiscal year.

Generally speaking, your present tax year won't qualify as a fiscal year if you've contacted the IRS to change your tax year, or you started your business during the year. Then you have what is known as a "short tax year." In a short tax year, you have to file taxes just like a regular year.

If you want to change your fiscal year, you can do so by filling out a form, about which you can find more information here. Changing your calendar year to a fiscal year can be especially useful if you have a seasonal business; if you're more active in the winter, having your financial records cut off in the middle of your business period would be crazy. Also, if you have meetings or make your budget at some other point during the year, it can be useful to have your financial records reflect that.

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