Beginning Guide to Business Grants and Loans for eCommerce

Starting a business is the most exciting time in your life. Growing a business can be exciting too as it indicates that the idea you had initially thought of will pay off. However, one of the main obstacles to both is funding -- having the money to begin or expand. It's great news that by doing a bit of research, you can find small business grants and loan opportunities.

It's all you need is a bit of assistance in determining where to go. You've come to the right place.

What are small business grants and loans?

Small business grants are essentially free money. It means you don't have to repay it, never. But, the majority of grants have conditions and limitations on who is eligible to receive the grant, as well as how the money will be used. They also usually have a cumbersome application process as well as the IRS usually considers grants to be business income, which means that it's taxable.

A small-business loan, or financing, is money granted to you, which you must eventually pay back the same way as a house or auto loan. Some small business loans charge an interest rate, while other loans have a fixed fee.

Small business loan types

Essentially, there are three types of small business financing:

• Debt financing refers to the fact that an institution offers you money and you have to repay the loan typically with interest, on a set schedule. Sometimes they also want some form of collateral to ensure that when you fail to pay the loan, they seize the collateral you have assigned to them.

• Equity funding is when a different partner or business entity gives you money in exchange to a share of the company. The typical scenario is that you'll be paying the lender a portion of your revenue going forward, and you lose some autonomy because you've become the benefit of a business associate. However, the loans are typically interest-free.

• revenue-based finance is when you get the loan but pay it back as an amount of revenue instead of a set monthly amount. This will be discussed more in the future when we discuss Payments and Stripe Capital and Wayflyer.

Within those groups, there are some different types. A majority of loans originate from banks. Some can be given through the government, and others are provided by private companies that specialize in the field.

Fundera is an terrific tool for learning all about small business financing. They even list certain banks along with the credit scores they require. Certain lenders and banks offer specific loans they may find relevant to your needs. Find out more information about the financing options available on Fundera:

• Equipment financing: A credit that is used to pay for a piece of equipment
• Business loans for short-term duration: an alternative for rapid turnarounds and immediate needs
• Merchant cash advance: a variant of the revenue-based finance
• Loans for startups: Financing made especially for businesses that are just starting out.
• Business line of credit A flexible loan that allows you to access funds when you need it
• SBA loans: loans via the Small Business Administration, including microloans

Things to take into consideration when seeking small-business financing

The three most important factors you want to think about prior to submitting or accepting an offer to take out a small business loan are ownership, control, and the risk.

For equity-based loans, as an instance, you surrender certain percentage of the ownership stake in the business you run, and lose control of making of decisions. However, they typically don't have any interest and they're not risky.

A loan for existing small companies: to introduce Stripe Capital

Access to financing can fortify your business's growth which allows you to grow and grow faster. With fast, flexible funding, Stripe Capital enables U.S.-based companies to invest in growth and stabilize cash flow.

With and Stripe the loan offer is made by the bank partner of Stripe, Celtic Bank, based on factors such as the sales of your business and its history with Payments. The application isn't lengthy or consumer credit checks.

When you've received an offer via email or in your notifications on your dashboard, you'll be able to select the size that's right for you and apply in just a few minutes. If approved, the funds generally arrive as fast as one business day.

Contrary to many loans provided by conventional banks + Stripe Capital charges one fixed fee, and the fee is never subject to change. This means that there aren't interest charges or late fees to be concerned about. Repayment also happens automatically, through a fixed proportion of your transactions and adjusts to your daily sales. The fixed percentage continues to be taken out until the amount owed has been paid.

Consider, for instance, that you receive a loan of $20,000 through Stripe Capital, and they provide you with 10% of the amount. That means your total loan obligation is $22,000. This represents a loan value of $20,000 with a loan cost of $2,000.

For our instance, Stripe Capital has established an interest rate for payback of 12percent. This means that every the day Stripe Capital can automatically subtract 12% of the revenue from your account for this month, until the loan is fully paid to. This can be beneficial to you because it means your payments will increase depending on your revenue, so your payments will never exceed your income. If you make no revenue in a given month, there's no any payment.

Let's say that on one day, you generate $900 in revenue, and on the next day, you're making $1,300. The first day (assuming that you pay 12%) is $108, then on the next day, it's $156.

Another low-risk eCommerce business financing choice: Wayflyer

Instead of interest, Wayflyer has a fixed cost. And because it's a revenue-based loan, there is no risk of going into bankruptcy, since revenue-based loans make the payments every month, based on the amount of income that your business earns.

Types of small business grants

Contrary to loans, which can be quite simple to grasp but grants can be hard to find and comprehend all rules and regulations.

There are generally two kinds of grants: government grants and private ones. Private grants usually come from foundations, businesses, or companies.

Grants are available for any of the many very special situations and kinds of business that include:

• Awards for contest winners
• Research and development companies for scientific research
• Women-owned businesses are owned by minorities, or veterans
• Rural and agricultural businesses
• Beauty and health businesses
• and many more...

If you visit websites like Grantwatch and Grantwatch, which charges a fee to access all specifics of a grant you'll see thousands of options that are updated regularly. However, before your mouth begins watering, remember that you're unlikely to be eligible for many of those grantsbecause they could be used for specific circumstances like those listed below.

We'll show you some resources to get more grants in the next few moments.

Small business grants for applicants

If you're planning to apply for a small-business grant, your first step is to narrow down your options to grants you actually qualify for. It's not worth filling out a long application for a small-business grant if there's no way to be sure of winning because you don't meet the prerequisites.

In the case of, say, being part of a minority group and you're a minority, you can make an application for several small-business grants for minority businesses. It's more likely to be successful of winning them than general grant because there'll be less competition, and because those grants were created specifically for small businesses similar to yours.

In addition, for established businesses, you're going to want to have a well-written business plan because the majority of grant applications have very precise questions.

They want to know why you need this grant.

They would like to be sure that they are funding a worthwhile business venture or expansion with a high-potential and is in line with their motives in granting the grant. If you haven't revised your business plan in a long duration, you might want to start by updating your plan.

If you already have a firm, you'll want up-to date information regarding the amount of revenue you earn each year, your number of employees as well as your Employer Identification Number (EIN), along with other fundamental information.

Next, you must write down your pitch, and set aside time to answer all the specific questions on the grant applications.

Small business loan applications

The application process to apply for a loan for business depends heavily on which type of loan you're pursuing.

If you're seeking the federal Small Business Loan such as the 7a loans it will require a very different process unlike a bank. Usually, there are more hoops to jump through for government financing, and understanding the maze on the internet isn't easy. Federal loans might be easier to qualify for which is why they could make a great alternative to bank loans.

Like you have seen earlier, there are a variety of types of small-business loan types, and the Fundera website provides specific banks and entities offering each kind of.

When you are applying for small-business loans, you want to be aware of:

• Credit score
• Why you need this loan?
• Your average monthly revenue
• The quantity you're after
• How do you pay it back

Where to locate small-business loan and grants

Be prepared, as there are a myriad of sources to help you with this. They vary in the ease of use and navigability.

• The Nav Small Business Grant contest. The Nav grants a grant of $10,000 for small businesses every quarter, plus a runner-up grant award, to businesses that submit an application and win their contest. This grant comes with almost no limitations.
• FedEx grant contest. FedEx has their grant contest running multiple times throughout the year. the winners are also awarded an account for printing services as well as a site audit as well as other benefits. The prize for the top spot is $50,000.
• Visa Global Innovation Grant. The grant competition offered by Visa has a few more stipulations that the previous two contests, but they choose the winners each year.
• Grantwatch along with Opengrants. These are fee-based grant-finding services that can be great to find smallergrants, which are based on niches that would otherwise be very difficult to come across. It is possible to search for grants by location, type of grant, company kind, or other criteria.
• US Chamber of Commerce grants. Another great resource with all kinds of grants. It also includes a great list of general small business grants that are available for all types of firms and also those with narrower qualifications.
• self-employed grants for business. If you're self employed and an NASE member NASE and are eligible, you could be able to apply for a grant to small businesses every month, for up to $4,000.

There are also list of grants offered by Nav, Bench as well as those of the the federal government. Grants from the federal government have a less probability of qualification, because they tend to fund only specific types of business.

What's the deal with the Small Business Association?

The SBA is a federal agency that is a federal agency. With such a title it would be expected that they'd offer grant money in support of... small businesses. But most of their money funds state and local programs for small businesses.

If you're looking for grants from the government it is possible to get better results by looking at the state and local level. The Economic Development Directory website won't connect you with grants, but it will provide a searchable and clickable map of each state that will lead you to numerous local resources.

Small-business loan sources

The Federal mall mall loan business program includes several choices that won't be useful to most companies. However, the 7a program is probably the most well-known one, and that one should be considered in case you are looking for small-scale company funding.

Go get 'em!

If you're searching for an opportunity to provide your existing or new business an extra boost in revenue, we hope you're feeling more inspired, motivated and well-informed.

Here's your plan of action:

1. Make sure you update your business plan.
2. Look through the options that may seem appropriate for your company and circumstances.
3. Look for small business grants and financing alternatives that give you an opportunity to win.
4. Consult with trusted advisors and mentors if you have them.

 Please note that when using + Stripe Capital, all loans are made through Celtic Bank, a Utah-Chartered Industrial Bank, a Member of FDIC. All loans subject to approval by the credit bureau.