Pre-Revenue Funding Options

 Finding funding options for pre-revenue (non-cash flowing) businesses or young businesses (less than 2-years old) is a challenge.

If you are looking at obtaining funding from a bank or credit union, you will need to be in business for 2+ years. Most alternative lenders want to see at least 6-months to 12-months in business.

Typically, your business is eligible for around 20% of your annual revenue in the form of a loan or line of credit. For example, your annual income is $100,000 you would be eligible for up to $20,000.

The good news is if your business is new, or not generating much cash flow, there are options. Our favorite is obtaining 0% lines of credit based on your personal credit score but issued in your business name using its EIN.

Fund and Grow offers 0% lines of credit in the form of business credit cards. These cards will also help you establish business credit. This credit will be formed in the name of your business using your EIN and not your social security number. Below you will find information on Fund and Grow and what they offer.

Overview of the Fund and Grow Business Credit Lines

$25,000 to $250,000

0% interest rates for up to 18 months!

Requirements

You need to have a 700+ FICO score on all three bureaus with $10,000+ combined established bank credit card limits already. It helps if your current credit utilization is 35% or less.

Benefits

This credit line can be accessed for up to 18-months at 0% interest. No cost for the capital if paid back within the introductory rate timeframe. And it is a self-replenishing line of credit. As you pay the credit line down, you have access to the credit line again. Another major benefit, as you utilize the credit line, it is not being reported to your personal credit bureaus, lowering your FICO score, and prohibiting you from accessing other funding. It reports only to the business credit bureaus where it is building up your business's credit history.

You will be shown how to access all the credit lines as cash, without it being considered a "cash advance" which typically comes at a very high-interest rate of 30% or more.

There is a $3,997 one-time fee or 9% success fee on the back-end.

For more information on their services, click on the link below:

https://www.fundandgrow.com/sign-up-now 

Additional funding options include:

SBA Microloans

Microloans

Microloans, as the name suggests, are loans up to $50,000 made to qualified business owners, especially small and minority businesses. These loan programs are offered throughout the country through a variety of sources. These loans are geared toward promoting entrepreneurship by assisting startup companies with initial startup capital or for business expansion.

They are applicable to any company or individual who qualifies based on each lender's specific criteria. These loans provide much needed capital that many people cannot qualify for through the usual banks. Borrowers must show their need for the loan and their ability to repay and must be willing to present any applicable documentation requested.

Other Micro lenders

The SBA is not the only micro lending option. Micro lenders are non-profit organizations that offer small businesses the opportunity to secure financing in small increments (less than $50,000). When it comes to micro lenders, be sure to check out these two options:

Accion: This is a great small business startup loan if you’ve been in business for less than six month and have an incubator-based or home-based business. Since the required credit score is 575 or higher, this is also a good option for borrows who may have bad credit.

https://www.accion.org/

Kiva: Kiva operates on a largely community-based, trust-driven platform. Businesses can crowd fund business loans from philanthropic-minded individuals. These loans carry a 0% APR and are provided to struggling entrepreneurs who have proven their character, invited their own network of lenders, we are unable to access other financial means, and have a business that has a perceived positive social impact.

https://www.kiva.org/

Peer-to-Peer Lending

Peer-to-peer lending continues to grow in popularity and is becoming a much more viable option for people who need money and for people who want to invest their money. Below you'll see the best peer-to-peer lending sites.

The way we borrow money and the way we invest money is changing. Back in the day, if you wanted a loan to pay off your car or credit cards, you’d go to a bank or a credit union, sit down with a loan officer, and wait for them to tell you yes or no as they “crunched the numbers.” Investing was always done with a traditional broker—online or in-person.

But times have changed. Instead of going to banks and brokers, we simply go to each other. That’s exactly what peer-to-peer lending is all about—helping each other, rather than relying on big banks.

Here are a few of the more popular peer-to-peer lending platforms.

Prosper  https://www.prosper.com/

If you’re a borrower, you can get personal loans up to $40,000 with a fixed-rate and a fixed-term of either three or five years. Your monthly payment is fixed for the duration of the loan. There are no prepayment penalties, either so if you can pay it off early, you won’t be penalized. You can get an instant look at what your rate would be and, once approved, the money gets deposited directly into your bank account.

Lending Club  https://www.lendingclub.com/

Personal loans. You can get a personal loan up to $40,000 that you can use for pretty much anything—like paying down credit cards, consolidating debt, improving your home, or paying for major expenses like a wedding or a car.

Business loans. You can get a business loan up to $300,000 with a fixed term between one and five years with no prepayment penalties. To qualify, you’ll need to have been in business for at least 12 months, have at least $50,000 in annual sales, have good business credit, and own at least 20 percent of the company.

Upstart  https://www.upstart.com/

Borrowers can get loans from $1,000 up to $50,000 with rates as low as 8.85 percent. Terms are either three or five years, but there’s no prepayment penalty.

Using their AI/ML technology, Upstart looks at not only your FICO score and years of credit history, but they also factor in your education, area of study, and job history before determining your creditworthiness. Their site claims that their borrowers save an estimated 24 percent compared to other credit card rates.

Investing with Upstart

Investing with Upstart is also intuitive. Unlike other P2P platforms, you can set up a self-directed IRA using the investments from peer-to-peer lending. This is a unique feature that many investors should be attracted to.

Like other platforms, you can set up automated investing by choosing a specific strategy and automatically depositing funds. More than 80 percent of borrowers on Upstart are college-educated with a weighted average income of over $83,000, and over 77 percent of them are paying off credit cards. This provides a pretty good look at who you’re investing in. Upstart claims to have tripled their growth in the last three years due heavily to their proprietary underwriting model, so it might be worth a shot to consider this option.

Before seeking any financing, you should know what your personal credit reports and business credit reports contain. You want to “see” what the lenders will see before you apply. You will also want to have your financials updated (i.e.; profit & loss statement, balance sheet, income statement, etc.).

To obtain and monitor both your personal credit and business credit reports and scores consider using NAV.

Nav brings a new approach to how a small business owner deals with credit by combining the power of seeing multiple credit reporting bureaus for both personal and business credit in one place. Their credit monitoring service has been featured on Fox Business News, CNN Money, TechCrunch, and more.

NAV is the only online provider that provides you access to your personal credit reports and scores from Experian and TransUnion and your full business credit reports from Dun & Bradstreet, Experian, and Equifax. Typically, you must pay $50.00-$150.00 to Dun & Bradstreet, Experian, or Equifax for a single business credit report.

There are four levels of NAV membership available. We recommend the “Business Boost” to our Anderson Funding Community members.

Free Account

What’s included:

Experian personal credit score and credit report – summary only

Summary only of business reports from Dun & Bradstreet, Experian, and Equifax.

MatchFactor powered financing marketplace (They use your business credit and personal credit to match you with lending programs and credit cards you qualify for. Those using MatchFactor are 3.5X more likely to be approved)

Cash Flow alerts

1-on-1 access to Credit & Lending Specialists

To sign up:  https://nav.nkwcmr.net/c/2632394/164102/2410

Business Boost ($39.99 mo.)    Recommended-Establishes Corporate Credit

What’s included:

Full Experian and TransUnion personal credit reports and scores

Full business credit reports from Dun & Bradstreet, Experian, and Equifax.

MatchFactor powered financing marketplace (They use your business credit and personal credit to match you with lending programs and credit cards you qualify for). Those using MatchFactor are 3.5X more likely to be approved)

Cash Flow alerts

plus:

1-on-1 access to Credit & Lending Specialists

Ability to dispute errors on business credit reports

Full service identity restoration w/dedicated identity specialist*

$1Million identity theft protection (Coverage includes reimbursement for legal costs, loss of income, travel expenses, child care and fraudulent withdrawals).

Follow up to (5) business credit reports (Can be competitors, suppliers, etc.)

Lost Wallet replacement (One call and your dedicated specialist will cancel all lost cards, report missing documents, and initiate a fraud affidavit and police reports for stolen wallets)

plus:

Build business credit with trade line reporting (NAV reports your monthly payment to Dun & Bradstreet, Experian, and Equifax business bureaus to help establish a business credit history and score.

To sign up: https://nav.nkwcmr.net/c/2632394/901704/2410