By: Ari Page
I never advocate that anyone borrow just to borrow. But if you need capital to make payroll or invest in something that you know will reap a short-term profit, then you need access to capital. In the past few years, even though money has been tight, there have always been options. Banks always need to lend to stay in business. You just need to know where to look.
Act I: Grandmother Isn’t Always Right
One of Steve Martin’s earliest routines went something like this. “I’ll never forget what my grandmother taught me. She said ‘Always…,’ no wait, ‘Never…,’ no it was, ‘Always…take a litter bag in your car. It doesn’t take up much room and when it gets full you can just toss it out the window.’”
That comes to mind when I hear people say things like, “Never…amass credit card debt.” If you can get better terms on a credit card than on a bank loan or a mortgage, than heck yeah you should amass credit card debt. If you borrow on a credit card at X% interest and make Y% with that money, where Y is greater than X, then let’s do that all day long!
And guess what. Ever since the current economic outlook improved and the market eased up, banks have been looking various ways to increase their earnings. Banks and federal associations are not quite as anal in their approach to risk, and want to find ways to generate some more business. The result is that some avenues of acquiring financing are now easier than ever.
One of the easiest, and, if done correctly, least expensive ways to get financing is via credit cards. I know this flies in the face of everything we’ve ever been told. Sure, many credit card companies still charge near-usurious interest rates, and most of us would be hard-pressed to make good use of capital at 20% and higher interest. But guess what. There are thousands of credit card offers at favorable rates for small businesses.
In fact, when the Office of the Comptroller of the Currency released their 19th annual “Survey of Credit Underwriting Practices” during the period ending June 30, 2013, they reported that among all loan products, credit cards had the greatest easing of underwriting standards.
Act II: Sometimes Things Too Good to Be True Are, in Fact, True
You’ve gotten another no interest credit card offer in the mail. “Sure,” you sardonically think. “Add in those hidden fees and crazy post-promotional-period interest rates and I’ll be giving them my house, car and boat in 12 months.”
But many of these offers are bonafide, great deals! And if you can benefit from access to financing, you should jump on these.
“But how does that even make sense for the bank?” you might say. Excellent question. The thing is, if banks don’t lend money, they don’t make money. Banks themselves can borrow at historic lows (they borrow at near zero percent from the Federal Reserve!), so they have access to lots of capital. Add this to the notion that banks have a lot of ways to make money, and you can start to see how this makes sense.
Banks want to have a relationship with you - and if they already have a relationship with you, they want to surround you with services that will keep you from going to the competition. So, providing you with great credit card offers costs them very little, and allows them to start shoving other promotions into your mailbox.
Moreover, although many zero percent interest terms appear to be capped, I am here to tell you unequivocally that if you know what you’re doing, that’s just not the case. Banks hope you’re not savvy enough to realize that if you know who to talk to and what to say, you can keep rolling over zero interest introductory offers for the foreseeable future. Business owners are the “crème de la crème” in the banking community and can take advantage of special promotional codes and techniques that aren’t available to the regular borrower.
Act III: Get Some
Here are some things you can do to take advantage of low- and zero-interest credit cards.
1. If you don’t have a business entity, get one. It’s easy to acquire and anyone can do it. You want to be smart about it, as some entities are far more lendable than others. For example, having Marketing/Advertising or Business Management in your business name, indicates you are (on average) a better risk than someone with Real Estate in their title. There are also important nuances in terms of what type of entity you set up.
2. Know how to elucidate what your business does. If you’re stuttering, stammering or seem unsure of your business, don’t expect the bank to lend to you.
3. If you have personal credit issues, get them cleaned up. There are many agencies, such as Kaydem Credit Help, that can assist you.
4. Search the web for credit card offers for businesses.
5. Do your homework to sort through various offers, identifying any hidden fees.
6. Explore existing relationships and see what they’re willing to do. I once went to my bank to open up a checking account and was offered a $17,000 credit card for being a loyal customer.
7. Consider requesting line increases or exploring promotional rates for those cards that you already have. Many banks won’t hesitate to reward good customers with increased credit lines.
Ari Page is CEO of Credit Card Builders, a company that helps small businesses raise unsecured, zero percent business financing. A voracious reader, Ari constantly scours the market for new techniques and strategies to identify creative and profitable borrowing strategies. Because of his unique insight and approach, Credit Card Builders has raised millions in funding for small businesses nationwide, with the average amount ranging from between $50,000 and $250,000.
On Wednesday, I’m hosting a free webinar with Ari about how you can get business funding.
Register For Free Webinar:
“How to Get $25,000 - $250,000
To Start or Grow Your Business”
Make sure to Register and reserve your spot on the webinar training before it fills up (space is limited).
Join me Wednesday 3/4, for a free webinar:
WASHINGTON, Feb. 10, 2015 – Agriculture Secretary Tom Vilsack announced that rural agricultural producers and small business owners can now apply for resources to purchase and install renewable energy systems or make energy efficiency improvements. These efforts help farmers, ranchers and other small business owners save money on their energy bills, reduce America's dependence on foreign oil, support America's clean energy economy, and cut carbon pollution. These resources are made possible by the 2014 Farm Bill.
"Developing renewable energy presents an enormous economic opportunity for rural America," Vilsack said. "The funding we are making available will help farmers, ranchers, business owners, tribal organizations and other entities incorporate renewable energy and energy efficiency technology into their operations. Doing so can help a business reduce energy use and costs while improving its bottom line. While saving producers money and creating jobs, these investments reduce dependence on foreign oil and cut carbon pollution as well."
USDA is making more than $280 million available to eligible applicants through the Rural Energy for America Program (REAP). Application deadlines vary by project type and the type of assistance requested.
USDA is offering grants for up to 25 percent of total project costs and loan guarantees for up to 75 percent of total project costs for renewable energy systems and energy efficiency improvements. The REAP application window has been expanded. USDA will now accept and review loan and grant applications year-round.
Eligible renewable energy projects must incorporate commercially available technology. This includes renewable energy from wind, solar, ocean, small hydropower, hydrogen, geothermal and renewable biomass (including anaerobic digesters). The maximum grant amount is $500,000, and the maximum loan amount is $25 million per applicant.
Energy efficiency improvement projects eligible for REAP funding include lighting, heating, cooling, ventilation, fans, automated controls and insulation upgrades that reduce energy consumption. The maximum grant amount is $250,000, and the maximum loan amount is $25 million per applicant.
USDA is offering a second type of grant to support organizations that help farmers, ranchers and small businesses conduct energy audits and operate renewable energy projects. Eligible applicants include: units of state, tribal or local governments; colleges, universities and other institutions of higher learning; rural electric cooperatives and public power entities, and conservation and development districts. The maximum grant is $100,000.
The REAP program was created in the 2002 Farm Bill. Because of the success of the program, Congress reauthorized it in the 2014 Farm Bill with guaranteed funding of no less than $50 million in annual funding for the duration of the 5 year bill. The 2014 Farm Bill builds on historic economic gains in rural America over the past six years while achieving meaningful reform and billions of dollars in savings for taxpayers.
Since 2009, USDA has awarded $545 million for more than 8,800 REAP projects nationwide. This includes $361 million in REAP grants and loans for more than 2,900 renewable energy systems. When fully operational, these systems are expected to generate more than 6 billion kilowatt hours annually – enough to power more than 5.5 million homes for a year.
In 2013, owners of the Ideal Dairy restaurant in Richfield, Utah, used REAP funding to install 80 solar modules and two 10-kilowatt inverters, which convert energy from solar panels to electricity. The owners have saved, on average, $400 per month. These savings have helped them preserve their restaurant and livelihood.
President Obama's plan for rural America has brought about historic investment and resulted in stronger rural communities. Under the President's leadership, these investments in housing, community facilities, businesses and infrastructure have empowered rural America to continue leading the way – strengthening America's economy, small towns and rural communities. USDA's investments in rural communities support the rural way of life that stands as the backbone of our American values.