Questions & Answers:

Q: What about the new bill HR2930. When will it be put in to use? JD - Ft Lauderdale, FL

A: The JOBS Act was signed into law by the President on Thursday April 5, 2012.

However, the law allows the SEC 270 days from Friday April 9, 2012 to write specific rules and regulations related to this new law. As the SEC will be the one to impose and enforce, it will be up to them to create these specific rules - like what crowdfunding site and companies will have to do to register with the SEC as well as what specifics documentation small firms that want to crowdfund will have to supply to potential investors.

If you are seeking crowdfunding for your business, you will have to wait the 270 days. However, this is a great time to start preparing your company.

As stated by Tanya Prive, founder of Rock The Post in a Forbes article before the law was signed:

"Once the bill is signed, the SEC will have a grace period of 270 days to implement additional regulations. In the meantime, Prive suggests following these steps to prepare your business to become a hiring organization as a result of this bill:

Get all the documents in place.
[This includes your] business plan, incorporation documents, business plan, financial forecasts and a full executive team bio.

Do market research.
Get all the facts in place in order to have a strong argument as to why people should fund your project.

Put together an Excel sheet of all the contacts you have and start asking key people if they are willing to share their contact list as it pertains to your audience.
The concept of crowdfunding involves work from the user seeking funds as they need to leverage their networks and ask their networks to lend a hand. We found that the initial 30-40% of activity actually comes from the user's network.

Start making your video.
Projects with videos are wildly more successful. In the video, it is important that you sell yourself, explain in three minutes or less your entire project and entice people to jump on board.

Start to craft your pitch in the best possible way.
Think like a public relations and marketing guru in order to find the best way to tell your story."

Related Resources:

The JOBS Act

The Forbes Article Mentioned

Equity Net (Crowdfunding Platform)

This question answered by: Joseph Lizio with Business Money Today

Q: Who is the best small business bank, in terms of service and loans? What bank would you recommend? Robert - Sunrise, FL

A: That is a very hard question to answer because all small businesses have different needs and thus one bank might not be better for one small company than another.

Instead of thinking of which bank is best for any small business, you might want to think about what bank is best for your business.

Some small businesses are local businesses only and as thus would probably do really well with a local or community bank or even a credit union. These types of banks would probably offer enough banking services to satisfy a local small business while keeping their banking costs down. Think about a local brick and mortar retail store. They would probably do very well with a local bank that ha a branch office very close to their store location so that they can quickly make daily deposits as well as quickly get cash for their cash registers.

However, if your business is a national business - then a national bank would probably work better. Think about a small business with offices in several states and each office has their own banking needs like making deposits or utilizing a lock box. If this company's bank is not a national bank with branches in that area, it would create a lot of headache for that company and its offices.

However, national banks can be more expensive.

You should also not just think about what your business is today but what it will be down the road. While your business may be small right now, if your plans are to grow that business - then you should be thinking about a bank that you can grow with.

Local banks usually have limited services and I have seen many, many businesses outgrow local banks. Local banks may be easier to get a loan from as the loan decisions are usually done in house - giving you, the business owner, a better chance to sell your opportunity to the decision maker. But, these banks are also limited in the amount of loans they can put out - especially to one business.

Example: I use to work as a commercial lender for a national bank. One day, I had a business owner approach me and tell me flat out that he does not like my bank and that he has a great relationship with the president of a local bank (whom he has been with for decades). However, since his business was growing, that local bank could no longer service his business's needs. This company needed a $1 million line of credit but the local bank that he was using could only provide a $500,000 line of credit - that was their maximum amount of exposure they could have in any one business.

Furthermore, there are national banks like Wells Fargo that have some of the best products and services for businesses that I have ever seen - however, they are also one of the most expensive banks that I know - it costs them money to provide all those services and they past on those costs.

But, some of their services like lock box services or merchant accounts can go a long way in speeding up a businesses revenue collection as everything is done within one bank and not between banks - which creates lag time.

Finding the right bank for your business is just like shopping for any other service provider for your business - like your phone company or internet provider. You have to shop around:

1) Look for a bank that can service your needs today as well as provide more services as you grow. Or, if you are a national company (or international company) - look for a bank that can meet all of those needs like a national or international bank can.

2) Look for a bank that wants your business more then it wants your fees. Thus, you want a bank that will offer individual services - each with their own costs. That way you can pick and choose what you need and only pay for those services - instead of a bank that bundles several products together (many of which you might not want or need) and charges one single price for all of it - regardless if you need all of it or not.

3) Look for a bank that works the way you do. Some people like to handle their own business and do not need to talk with a teller or meet with a banker every day. Thus, look for a bank like Bank of America that focuses more on allowing people to handle many of their own banking needs through technology then through bank employees. Some people need the other and thus should look for a bank that provides that (a lot on hands on).

Regarding business loans. All banks look for two things. Your ability to repay the loan (from cash flow NOW - not after you get the money) and your willingness to repay (from your credit scores).

Most banks (big or small, local or international) will not lend to a small business that are not profitable and that have not been profitable for at least three years. It is just too much risk for them and the FDIC will not allow it.

Thus, if your small business does not have significant cash flow to repay a loan - you are better off seeking other forms of business financing - like accounts receivable factoring, purchase order financing or business cash advances (there are different forms of these loans). These loan products do not care so much about your time in business or if you are profitable. They look for other cash events and focus on those only.

I wish I could tell you what bank is best but it really come down to what type of business you are or want to be and what your needs are.

In my opinion, local banks are easier to work with but they have limits on what they can provide. National or international banks are harder to work with but they offer so much more in products and services.

Lastly, I would like to make a suggestion. If you know of other similar businesses (not just in your area either) ask them (their owners) who they use and why. Also ask what those banks are missing when it comes to servicing their business. This might help put you on a better track.

If you can't find a similar business - look around your area and try to find a couple of highly success businesses and ask them.

Thanks for the great question.

As a side note: My business is an online business and I conduct everything online including accepting payments - thus, I use an online bank that allows me 24/7 online access, electronic deposits, online bill pay and allows me to transfer money to my local personal bank so that I can pay myself. This bank fits my needs but might not be right for yours or other small businesses.

This question answered by: Joseph Lizio with Business Money Today

Q: I want to start my own online business but, having been unemployed for over a year now, my credit score is under 600 FICO. Can I get a business loan with this credit score. Martin - Phoenix, AZ

A: The quick answer is no - but, always remember that where there is a will there is a way. Here are few suggestions:

1) Work With A Partner:
Find a partner who does not have the same weaknesses as you and get together to start a business. This is probably the easiest way.

2) Friends & Family:
Tap those who know you best and who probably would not look at your credit history. Pitch them your business idea and what you think you can achieve with it then state you are asking for investment or some type of financial help.

See How Friends & Family Loans Work

3) Non-Profit:
If your business idea or concept can also be ran as a non-profit, you might think about this avenue then look for grants to support your business. While grants are very hard to get, for the most part, the granting organization will not look into your personal credit history.

See A Listing of Public Grants

4) Work At Your Business First:
Couple of ideas here. When I started my current business, I taught myself how to program html and php then put together this online business. It required very little capital as I did everything that I could on my own - it just took a lot of time.

The smaller things I did need to purchase - I either used my savings or used personal credit cards.

Or, you can always start your business - at the lowest minimum you can, get out and close some deals and get orders in hand - then use those orders to seek financing. We call this putting the cart before the horse.

Example: You go out and find customers telling them what you want to offer. They like it and agree to buy. You have them sign a purchase order and tell them either to 1) pre-pay you 50% or more now and use that money to complete their order or 2) take those orders (if they are from strong customers) and factor them with a purchase order financing company who will advance up to 100% of the capital you need to complete those orders.

Learn More About Purchase Order Financing

And, lastly,

5) Fix Your Credit:
Take the time now to fix and improve your credit. Bring past due account current and clear all other negative items. Then, get out and seek other personal credit accounts like department store charge cards or secured bank loans and secured credit / debit cards.

Once you have these in place, use them once for very small amounts, pay them off immediately - them cut them up. This will help rebuild your credit.

If you are serious about being in business - you don't want to face this credit issue each time you want to grow or expand your business - so, fix it now and put it behind you.

See Other Ways To Fix Your Credit

This question answered by: Joseph Lizio with Business Money Today

Q: For my service business, what is the best way to get working capital? Steve - Janico Company - Little Rock, AR

A: There are many forms of working capital - however, the fastest growing form today (and usually the easiest to qualify for) is a business cash advance.

If your business accepts credit cards as payments from customers, you can leverage future credit card sales (not past income) to secure the working capital your business needs to move forward. Know that these are not loans - but advances against future income.

Most business cash advance providers put less weight on your credit score and more weight on your ability to generate revenue in your business. Thus, they may be easier to qualify for. Most only require that you be in business for a year or more, have $5,000 or more a month in credit card sales and be in good graces with your landlord (if you have one).

Learn more about business cash advances.

This question answered by: Stevey Johnson with Business Money Today

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