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Paycheck Protection Program: Round 2 for Small Businesses

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Paycheck Protection Program: Round 2 for Small Businesses

Michels & Hanley CPAs, LLP COVID-19 –

Paycheck Protection Program: Round 2 for Small Businesses

12.18.20 | Client Alert

 

Earlier this month, a group of lawmakers revealed the framework for a $908 billion COVID economic relief plan (Senate “Gang of 8” Proposal), which designates $300 billion for support of small businesses, including additional Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) loans. In addition, the package contains provisions for a simplified forgiveness process for PPP loans of $150,000 or less, and allows expenses paid with PPP funds to be deductible. The package is gaining support from congressional Democrats and Republicans, which has renewed hope that a package will be passed before the end of the year, perhaps on or before Friday, December 18.

Lawmakers indicated that the $300 billion earmarked for small businesses will be geared toward assisting small companies that can demonstrate economic hardship. Specifically, the new plan contains another round of funding under the Paycheck Protection Program (PPP2) for borrowers that have exhausted the first round of funds. It also expands forgivable expenses to include supplier costs and investments in facility modifications and personal protective equipment in order to operate safely. The first round of PPP loans provided only two-and-a-half months of covered costs, and we are now more than eight months out from the initial rollout of the program. Economic necessity will be a factor in qualifying for an additional PPP loan, and borrowers will be required to demonstrate declines in revenue to qualify.

The new round of PPP funding will have a framework similar to the first round, and loan amounts will again be based on 2.5 months of payroll costs. The maximum loan amount will be $2 million, allowable expenses will be similar to the first round with the addition of safety expenditures, and the 60%/40% allocation between payroll and non-payroll costs will be required for full forgiveness.

Businesses seeking a PPP2 loan should be proactive in gathering financial data to support economic need for additional funding. Comparative financial reports that reveal a significant revenue reduction (at least 30% in any quarter of 2020), number of employees (businesses with 300 or fewer employees will be eligible for this round), current operating expense levels, and timing of the exhaustion of initial PPP funds are examples of the data businesses can begin to compile in advance of the opening of the application process.

While very little information is available regarding details of the Senate Gang of 8 Proposal, if it passes in the next week or two, it will likely be implemented very quickly. Therefore, businesses that believe they may be eligible for a PPP2 loan should begin to prepare and gather their documentation now in order to expedite the application process in this second round.

Compliance issues for employers with remote employees.

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HR, Human Resources

Multi-State Rules for Remote Employees

Paul L. Scrom Jr., Esq.

Paul L. Scrom Jr., Esq.

Partner at Jules Halpern Associates LLC
 
 
Many employers have switched their employees to remote work with no foreseeable return date in sight. More than ever, employees are being hired to be permanent remote employees. Those remote employees can work from anywhere. An employee for a New York employer can work from a vacation home in South Carolina. An employee from a New Jersey company can fulfill their dream of moving to California without quitting the job. While working remotely grants a new freedom to employees, it creates compliance issues for employers with multi-state employees.

What does this mean for employers with multi-state employees? Having multi-state employees implicates all types of employee protection laws including disability, worker’s compensation, leave laws, and unemployment issues. The employee protection laws of the state where the employee resides and works typically govern.

Employers with multi-state employees need to be aware of the following compliance concerns:

Federal v. State Law

Federal law protections take precedence whenever the Federal law has a greater standard. Examples of Federal laws that implicate employee protections are the Fair Labor and Standards Act (“FLSA”), Family Medical Leave Act (“FMLA”), and the Families First Coronavirus Response Act” (“FFCRA”).

When a state, county or city regulates something not covered in Federal law, or has a higher standard of protection than Federal law, the employer needs to comply with it, in addition to the all of the provisions of the Federal law.

For example, the federal minimum wage for covered employers is $7.25 under the FLSA. New Jersey’s minimum wage is $11.00. Employers in the state of New Jersey must comply with New Jersey’s minimum wage law rather than the federal minimum wage standard. State law would trump federal law.

Additionally, the FFCRA requires certain employers to provide their employees paid sick leave or paid expanded family and medical leave for specified reasons relating to COVID-19. States sick leave laws may not apply to these specified COVID-19 situations, and thus, employers must comply with the federal law. Federal law would trump state law.

Leaves of Absence

The FMLA entitles employees to take unpaid, job-protected leave for specified family and medical reasons. The FFCRA requires certain employers to provide employees with paid sick leave or expanded FMLA leave for specified reasons relating to COVID-19. While the FFCRA is effective through December 31, 2020, some states have decided to enact permanent paid sick leave and paid family leave laws.

Employers need to be aware that the list of states with or without paid sick leave and paid family leave laws has been changing in the light of the COVID-19 pandemic.

For example, New York now requires certain employers to provide paid sick leave under the New York State Sick Leave (“NYSSL”) and paid family leave under Paid Family Leave (“PFL”). In addition, New York City modified its preexisting Paid Sick and Safe Leave law to not only conform to the New York State law, but to grant even greater protections in light of COVID-19.

Other states with paid sick leave laws include Arizona, California, Connecticut, Maryland, Massachusetts, Maine, Nevada, New Jersey, Oregon, Rhode Island, Vermont, Washington, and Washington D.C. In addition to New York’s PFL, California, Connecticut, Massachusetts, New Jersey, Oregon, Rhode Island, Washington, and Washington D.C. also have paid family leave laws.

Disability

The Americans with Disabilities Act (“ADA”) requires employers to provide accommodations to applicants and employees with disabilities, which may include providing modifications to existing leave policies and providing unpaid leave. The FMLA allows employees to take up to 12 weeks of unpaid leave for treatment of or recovery from serious health conditions.

Some states provide short-term disability programs, such as California, Hawaii, New Jersey, New York, and Rhode Island.

In New York, an employee with an injury or illness not related to their job may be eligible for short-term disability benefits. Employers must provide disability benefits coverage for these employees. The Disability Benefits Law (Article 9 of the WCL) provides for weekly cash benefits to replace, in part, wages lost, for up to 26 weeks.

Bear in mind that while PFL does not replace disability benefits coverage and these two benefits cannot be taken at the same time, an eligible employee can use both benefits to support their needs (i.e., pregnant employees can use short-term disability instead of PFL or use short-term disability then PFL).

Worker’s Compensation Insurance

Every state has its own worker’s compensation laws, which may vary from state to state.

Worker’s compensation provides cash benefits and/or medical care for workers who are injured or become ill as a direct result of their job. Employees who are injured or become ill when working remotely may still be eligible for worker’s compensation. To see what injuries are compensable for remote employees, click here.

Employees may file a claim in (1) the state their work is principally localized; (2) the state where they were injured; (3) the state where they live.

If an employer purchases worker’s compensation insurance in one state while having employees working and/or living in another state, the employer has created a gap of coverage for claims generated by employees. An employer should add those states to their current policy.

Some states such as California, Illinois, New York, and Pennsylvania have severe penalties for not purchasing worker’s compensation.

In California, for example, it is a criminal offense to not provide worker’s compensation for employees, punishable to up to a year in prison and/or a fine up to $10,000. Additionally, the state issues of up to $100,000 against illegally uninsured employers.

Other states, such as Connecticut will issue a stop-work order so that employees cannot work until the employer provides worker’s compensation insurance in addition to imposing a $300 fine per worker per day if there is not proper coverage.

Note that each state may differ in employer requirements, statute of limitations for filing a claim, and the scope of coverage.

Unemployment Insurance

Unemployment insurance is a joint state-federal program that provides cash benefits to eligible workers. Each state administers a separate unemployment insurance program, but all states follow the same guidelines established by federal law.

Employees should file unemployment claims with the state where they worked. If an employee worked in a state other than the one where they now live or they now work in a state where the employer is not, the state unemployment insurance agency where they now live can provide information about how to file an unemployment claim with other states.

Employers must pay a state unemployment tax (“SUTA” tax) and federal unemployment tax (“FUTA” tax). FUTA taxes are employer-only taxes while SUTA taxes are predominately employer paid; however, some states require employees to pay a portion.

In determining which state should unemployment tax dollars if an employee works in more than one state, the DOL has created a set of rules:

  1.  

State Taxes

Employers may be subject to other states’ tax obligations by having remote employees in those states. These tax implications include compliance with employer withholding obligations, payroll taxes, and other additional state tax requirements. Employers need to be aware of these tax consequences to avoid tax penalties, fines, and interest.

Most states require employers to withhold federal, FICA and state taxes from employee wages earned for work performed in that state. If an employee is a resident of one state but works in another and there is no reciprocal agreement (agreement between states that allows employees to only pay income taxes to their resident state), the employer may have to withhold according to the laws of both states. Additionally states are publishing guidance on the “nexus” with states for tax purposes and temporary tax relief. Employers need to pay attention to the guidance published by those particular states in which employees work remotely to determine if the employee’s presence in the state is a sufficient nexus to be liable for state tax obligations.

Some of the tax relief provided by the states is of limited duration. Some states limit the temporary relief to remote work arrangements necessitated by a government lockdown, a physician’s order, or an executive order relating to the pandemic. For example, Massachusetts’s temporary tax relief for corporate income tax will last until the earlier of December 31, 2020 or 90 days after the Massachusetts state of emergency is lifted.

Compensation

Many individual states, such as New York and California, have adopted wage and hour laws and regulations. Employers need to be aware that compliance with just the FLSA will not shield employers from liability for other claims.

Minimum Wage Laws

While the federal minimum wage for 2020 is set at $7.25 per hour, states can provide for a higher minimum wage requirement. For example, states such as California, New York, Connecticut, and New Jersey’s minimum wage laws set minimum wage much higher.

California’s minimum wage is set at $12.00 per hour; Connecticut’s minimum wage is set at $12.00 per hour; and New Jersey’s minimum wage is set at $11.00 per hour.

Note that cities can provide for higher minimum wage. New York has many tiers, based on location. While New York State’s minimum wage is set at $11.80 per hour, New York City’s minimum wage is set at $15.00 per hour for all size businesses.

Rest Periods and Meal Periods

Federal law does not require lunch of coffee breaks. If an employer offers short breaks, federal law considers the breaks as compensable work hours (paid breaks). Meal periods, however, are not work time and not compensable (paid breaks) under federal law.

Some state laws, such as California, require a paid 10-minute rest break for each 4-hour work period. California, Colorado, Illinois, Kentucky, Minnesota, Nevada, Oregon, Vermont, and Washington all have regulations regarding rest periods.

Many states require employers to provide a meal break for employees if their shift exceeds a certain number of consecutive hours.

New York provides for a thirty-minute unpaid meal period for employees who work shifts of more than six hours. California provides for a half an hour meal period, if an employee works for more than five hours.

Conclusion

Employers with employees working remotely in multiple states need to be aware of the many compliance issues that can arise under state law, including but not limited to: worker’s compensation, disability benefits, compensation, state tax implications, wage and hour requirements, minimum wage, unemployment, and leaves of absence. Failure to comply with employee protective laws and state tax obligations can result in monetary penalties and in some cases, criminal implications. Now more than ever, employers need to be aware of and in compliance with the laws of the states in which their employees reside.

Investing in the ESports Industry

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What Investors Should Consider Before Investing in the Esports Industry

Stocks of esports companies are benefitting from rising investor attention. The dramatic growth of esports as a spectator sport, entertainment, and even a gaming outlet makes the attention they’re getting justified.

Recent statistics on electronic sports (sometimes written e-sports or esports) show the events attract more than 500 million viewers worldwide. For those less familiar, esports is defined as organized video gaming. The games may consist of individual or multiplayer teams. Participants train and compete against other players or teams in an organized contest under standard agreed upon rules. The competitions attract large audiences both at the venue and across social media sites such as Twitch.tv. A reported 1.8 billion hours of esports, were watched in 2019, this is a 125% increase from hours reported the previous year. The trend has been positively impacted by the closure of traditional gambling outlets and sports in 2020.

Like any fledgling market with fast-growing revenue, there’s a rush of companies vying for a slice.  Coverage of other people playing video games has demonstrated that it has tremendous and growing pull and is able to find an increasing number of followers —the audience is expanding rapidly and appears to have far more potential to the upside.

How Do Esports Profit?

Esports companies are primarily licensing companies, they sell access to branded events similar to other sports business models. This could include broadcast licensing deals, merchandise, live-event tickets, sponsorships, advertising, and clothing. Companies have also sold rights to operate esports teams and officiate organized leagues.  

As with many young industries gaining popularity, there is only so much room at the top. So, although this segment within sports entertainment is growing, investor evaluation of the individual companies and their prospects is highly recommended.

What to Look For

When evaluating if esports is a fit for your portfolio and what stock or stocks provide the best risk/return opportunity, start with the basics you look for in other industries and companies.

Measure trends – Data for a number of esports companies including GMBL, GAME:CA, MLLLF, and others can be found under the COMPANY Data section in Channelchek. This could serve as a good place to find key ratios, charts, insider activity, and other statistical trends.

Company strength relative to peers –  Every company has advantages and disadvantages relative to the others. Brand recognition, contractual agreements, unsettled legal disputes, and sheer size, to name a few. Learn about the competing companies. This is especially important when a market segment is new and the future looks positive for the segment — there is always a swarm of companies elbowing their way in. There are usually fewer over time as survivors benefit from outcompeting other entrants. Familiarize yourself with the companies you may be interested in by catching up with the news on the tickers. The COMPANY Data section of Channelchek is also a source for news feeds on many of the stocks.

Management Effectiveness – Most investors don’t have the luxury of sitting down with management and understanding the merits of their strategy and ability to implement. Detailed information can still be garnered from the explosion of online conferences and roadshows, many of these can be accessed on “replay” on YouTube and other video sites. Professional research should not be overlooked when evaluating management. Up-to-date research and analysis by FINRA licensed analysts can be invaluable for understanding management and the well-being of a particular company. If research isn’t available on all the companies you’re comparing, it helps to read reports  that are available to best understand what a Wall Street professional looks for in this segment. A current example is Esports Entertainment Group (GMBL) covered by Noble Capital Markets.

Take-Away

The popularity of watching online and in-person (most venue events are on hiatus due to COVID-19) professionals play video games is on the rise. This segment of the sports licensing, gaming, and broadcasting industry is in its infancy and yet to be fully defined. Infancy is when the potential for reward is usually greatest, but at the same time risk of loss can also be high.  Know as much as you can before deciding to be involved and in which companies. Read what true research analysts think, predictions on where the segment is headed vary greatly. However, most expectations point to increased popularity and acceptance. Esports and gaming video content already have a large audience, the opportunity to further expand into more mainstream acceptance and becoming even more lucrative while other sports entertainment is struggling, make it an interesting business to evaluate, and perhaps weave into a diverse portfolio.

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Small Business Financing Options

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Financing Options for Your Small & Medium Business

small business financing options
"...Whether you’re starting, running or growing a business, funding that business is the fundamental way of receiving funds. ...While business loans are common place, they are by no means easy to secure..."

Small & Medium business loans are a segment of the funding market secured from lenders, traditional banks, alternative lenders, and online technology funding platforms.

Whether you’re starting, running or growing a business, funding that business is the fundamental way of receiving funds.  Most businesses think of banks as their go-to source for funding their business.  But there are other lending options which SMB businesses can consider including, credit unions, commercial lending companies, government (SBA) backed loans, and online funding platforms, such as “Kickstarter”.

While business loans are common place, they are by no means easy to secure.  Due to the risk lenders assume by making loans, borrowers are asked to meet certain requirements to secure their funding.  In this article we’ll discuss the aspects of business loans, loan criteria, types, and how to choose a lender.

The Business Borrowing Credit Spectrum.

Lenders have a large pool of potential borrowers and see a vast range of creditworthiness from those borrowers.  Based on where a business falls on the credit spectrum will determine the various options of lending products available to them.  The businesses at the higher end of the credit spectrum can commonly secure loans of their choice at favorable rates, but those businesses further down the credit spectrum usually will have less financing options at less favorable rates and more restrictive loans.

Along with the broad credit spectrum there is also a vast spectrum of financial products from traditional banking and lending institution, and SBA lenders, serving the creditworthy borrowers, and many types of alternative lenders, including the newer fintech online platforms, serving both the more and lesser creditworthy borrowers.  With funding options including both secured and unsecured loan products, with some products requiring guarantees from the borrower.

Fintech has helped bring more financing options to the small & medium business community, in some cases businesses are able to start the loan process in minutes by completing a simple online application.  And the full online lending platforms bring both the investors & lenders together with borrowers and facilitating the financing.  But in all cases. to qualify and secure financing options businesses will need to meet the requirements set by the lenders.

 




 

What do lenders look for when considering a business loan?

For many businesses the first stop when seeking funding is a bank or some other type of conventional lending institution, such as your local bank and credit union.  These traditional lending institutions offer a variety of financial products, including term loans and SBA 7(a) loans.

Currently, with fintech and the continued rise of alternative lenders, there are many more financing options for the small & medium business community than there were in the past. Offering similar if not better terms then the traditional lenders, sometimes offering quicker turn around and additional lending options.  With the rise of fintech, a small business owner can start the lending process in a few of minutes by completing a simple secure online application.

  1. Your Business and Personal Credit Score Counts.

For a business, there are two types of credit scores that matter, your business credit report and your FICO credit score. Lenders will utilize this information to help determine if they will lend your business money, how much money, and the interest rate they will charge you on that loan.

  • A business credit score is tied to your employer ID number, which can be registered with Equifax, Experian or Dun & Bradstreet. Each organization uses their own methodology of calculating a business credit score.  For example, they’ll consider factors such as credit utilization, business size, age of business, public records and the owner’s personal credit score to calculate a score.
  • A FICO credit score is your personal score, which can range from 300 to 850. It is tied to your social security number and is calculated by 3 credit bureaus, Equifax, Experian, and Transunion. A FICO score is calculated using multiple factors, such as debt repayment history, outstanding debts, length of credit history and any new lines of credit opened.
  1. Debit to income ratio.

Your debit to income ratio is a percentage that expresses how significant your required debt service payments will be in comparison to the money you bring in.  For example, you owe $300 vs an income of $1000, you debit to income ration is 30%.  Commonly, lenders would like to see a debt to income ratio in the low to mid 30s, but loans can be approved with a ratio up to 43%.

  1. Collateral.

The assets held by your business are also considered, and the business may be ask by the lender for them to be used to back certain types of loans or if other factors in your loan package aren’t strong enough.  Conventional assets used as collateral include equipment, real estate, machinery, or other assets.

  1. Required Documentation.

After deciding you are ready to apply for a loan it’s time to gather all the legal and personal documentation required to complete the paperwork and application.  As part of your loan package, you will usually have to provide several current months of bank statements providing the lender an understanding of the business cashflow and ability to make loan payments.  Other documentation required by lenders may include, corporate documents, if applicable, proof of ownership, tax returns and other documentation, determined by the type of financing you are interested in securing.

Getting a Small Business Loan with Bad Credit.

Yes, you can get a small business loan with bad credit.  When trying to secure a SMB loan with bad credit it’s important to check your credit score by obtaining a free credit report.  Review that credit report to determine if there are any inaccuracies, if so reach out to the credit bureaus and dispute any incorrect information.

Consult with a lending professional to understand your options on the types of financing programs which you may be eligible for based on your credit situation.  Alternative lenders may provide additional options.  Unlike a traditional bank or lending institution, alternative lenders have programs for all types of credit profiles.  Don’t let your credit score prevent your from seeking financing for your business you may still qualify for specific products and programs offered by these lenders.

Types of Business Loans.

There are many different types of business loans available depending on your planned uses of the funds you are trying to secure.  It may be difficult to determine the type of loan which will best meet your needs and be best for your business.  So do your research or consult with a professional business financing advisor. When broken down to their fundamental level there are two basic types of loans.  All loans are either secured or unsecured loans.

Secured loans require collateral, while unsecured loans do not.  It is important to understand the differences between these two types of loans.  There are many factors, such as your business size, age, and sales to mention a few, that will determine which type of loan your business qualifies for.  Many loans can be either secured or unsecured.  It will depend on the terms required by the lender.  The following are some of the specific types of loans available.

  • Business Line of Credit. 

A business line of credit is a type of loan that gives a business flexibility when accessing funds.  Instead of a fixed amount at one time, businesses can access funds as needed.  This type of loan allows businesses the ability to scale their business without being restricted by obstacles along the way.  Some of these scaling activities may include inventory purchases, unexpected machine repairs, acting on new opportunities, and bridging the occasional cash-flow shortfalls.

  • What are the Types of business lines of credit?
A secured business line of credit. 

A secured business line of credit requires the business to use one of their assets as collateral to obtain the business line of credit.  This type of loan may be one of the best options for businesses with a lower credit ratings, enough time in business, or other prior credit issues that may raise concerns, with lenders with unsecured loan.

  • The unsecured business line of credit.

An unsecured business line of credit doesn’t require the businesss to use of an asset as collateral.  However, liens and/or personal guarantees may be requested by the lenders.  An unsecured loan is commonly a higher risk to the lender.  Businesses with stronger credit history, and positive business attributes, are more likely to receive unsecured business lines of credit.  Also, unsecured business lines of credit may have higher interest rates than secured due to the risk to the lender.

  • Where to secure the best business line of credit. 

Alternative lenders tend to offer the best business lines of credit available in the lending community. When businesses are shopping for the best busines line of credit its important to consider options that include:

  • A true revolving line, access to additional funds once you begin to pay back the line
  • Fast processing, from application to funding.
  • Access to a wide variety of ending options.
  • Ongoing access to the line to be used to assist with cashflow in times of opportunity and emergency
  • Better rates and terms that will meet your needs.

 

  • What is equipment financing and equipment leasing?

Equipment financing refers to the funding  businesses use to purchase business related equipment.  Equipment financing can be achieved through equipment leasing or equipment financing.  Both providing to the business, the benefit of not having to expend a large cash outlay to secure necessary and potentially business growing assets, ultimately freeing up working capital for the businesses.

  • Equipment leasing. 

Equipment leasing & equipment financing are similar, though when a business is leasing equipment they are technically paying a rental fee to the equipment owner each month.  At the conclusion of the lease the business can opt for a buyout and purchase of the equipment or end the lease contract and return the equipment to the ower.  Keep in mind, one disadvantage of renting equipment without the prospect of owning it may be it is more expensive in the long run.

  • Equipment Financing. 

Equipment financing is funding used as an outright purchase of business-related equipment.  As an alternative to using the company’s working capital to purchase that equipment.  Equipment financing provides the business, like a traditional car loan, the ability to finance the full purchase price of the equipment and repay the interest and principal over a fixed time frame.  At the completion of that payback period the business owns the piece of equipment outright.

  • What is an SBA loan?

An SBA loan is a government backed loan that can be used to start or expand a business.  SBA loans have specific eligibility requirements, such as business size, ability to repay their loan, and business purpose.  The SBA does not lend the money they work with approved lenders who offer SBA programs, with those lenders benefiting by eliminating loan risk due to the government backing the loan.

  • SBA’s requirements include.
  • For profit business
  • Good to excellent personal credit
  • Must be considered a “Small Busines” under SBA definition
  • Must be in business for at least 3 years

(SBA 7(a) may be available if your business doesn’t meet the minimum time in business or credit score requirements.)

  • Types of SBA loans. 
  • An SBA 7(a) loan is the primary loan product from the SBA. This loan isn’t issued directly from the SBA, instead the SBA, assisting the business owner, acts as partial guarantor of the loan, capping interest rates, and limiting fees.  The 7(a) loan can generally be used for any business purpose.
  • An SBA 504 loan is generally used for purchasing fixed assets such as equipment or real estate which ultimately acts as collateral for the loan. The 504 loan may require a down payment from the business and are available through Certified Development Companies (CDC’s) not lenders.

 

  • Accounts Receivable Financing. 

Accounts receivable financing or AR financing is a type of financing where the business finances their outstanding invoices for working capital.  It can either be in the form of out right selling the asset, (factoring), to the lender or using the accounts receivable (invoices) as collateral for the loan.

AR financing uses your outstanding invoices as collateral to help the business secure financing or an advance to the business.  Though, unlike factoring, the business isn’t selling their invoices to a third party.  The business maintains responsibility for collecting their outstanding invoices while making payments against their loan.  AR financing doesn’t work well for business that work on small gross profit margins due to the interest cost eating away at to much of the profit margin.

  • Merchant cash advance (MCA) Loans. 

A merchant cash advance is a cash advance not technically a loan, which is repaid by withdrawing a percentage of the businesses credit card sales, typically daily or weekly. Since the merchant cash advance (MCA) repayment is based on a percentage of the daily balance the greater the businesses credit card sales the quicker the advance is repaid.  The downside of an MCA is during a business downturn the payback period will become extended or leave limited funds available to pay the businesses expenses.

A merchant cash advance will provide your business a lump sum of money in exchange for a percentage of your future credit card sales.   Instead of making a fixed payment over a period of time the advance is repaid usually daily or weekly by the lender collecting the agreed upon percentage of your credit card sales.

  • What is an Asset Based Loan?

An asset-based loan is secured by owned collateral.  Typically, they may be secured by real estate, accounts receivable, equipment or other assets owned by the business owner.  These assets secure the loan for the lender if the borrower defaults on the loan, the lender has the right to receive the pledged asset.

  • Franchise Business Financing. 

When you’re looking to finance a franchise business your first choice may be to contact your franchisor and inquire with them of any available options to assist with your business financing needs.

Regardless, of their recommendation you may still want to shop around for a less expensive and more favorable options.

Alternative lenders generally have financing options for franchises that may assist with the franchisors mandated updates, at a lower cost then the franchisor is offering.

  • Guaranteed Loans

Guaranteed loans require a written promise from a business owner or third party stating whom will be responsible for paying the loan in the event of a business default.  Guaranteed loans are considered unsecured since the lender is relying on the guarantor’s credit worthiness instead of physical collateral.

  • Business Loans with Personal Guarantee.

A personal guarantee is when the business owner provides the written promise (guarantee) of the loan repayment.  When a business owner signs a personal guarantee they are assuming the risk from the business against their personal credit and assets.  If the business fails or is unable to repay the loan the creditors will go after the business owner for the loan repayment.

  • Standard Guaranteed Loan.

A standard guaranteed loan, is where a third party investor, spouse or SBA guarantees repayment incase of the loan default.

  • SBA Guaranteed Loans.

SBA guaranteed loans, as mentioned earlier, the SBA sets lending guidelines, and then guarantees the loan for the borrower.  Providing inducement for the lender’s to lend to the business.

  • Bridge Loans.

Bridge loans act as the name implies.  If a borrower needs money for a short period of time to “bridge” an upcoming expense.  A lender can provide a solution for that short-term financial need.  For example, a construction company may require a loan to pay their sub-contractors while completing a project.  After the project is completed and the contractor secures permanent financing the bridge loan will be re-paid.

  • Start Up Business Loans.

There are financing options available for businesses regardless of how long they’ve been in business, their revenue, or their credit score.  However, your options are limited if you have been in business less than 6 months or have less than $15,000 in monthly gross revenue and questionable creditworthiness.  Securing a startup business loan from a bank is extremely difficult because of the strict lending guidelines.

Traditionally most startup businesses are forced to rely on nontraditional lending sources such as, friends and family, private investors, and alternative lending sources.  Thanks to the fintech revolution startups can turn to, marketplace lenders, and crowdfunding platforms.  These types of platforms leverage a technological platform to bypass banks and conventional lenders and connect borrowers directly with investors and or lenders.  While banks make loans with deposited money, financial technology platforms connect investors and borrowers directly.

How to Choose a Lender?

Lenders are unique, just like their borrowing needs.  It’s important to thoroughly assess your company’s needs before deciding on the type of financing your business requires and the prospective lender that best fits your needs.  Such as, if your needs are for quick cash a traditional loan from a traditional lending institution, probably isn’t going to work for you.  That need dictates you looking towards lenders offering cash advances or factoring.  If your needs point towards a term loan with low interest rates, and you have time on your side. You can do your research shop around and choose a lender that best meets your needs and priorities.

If you have a solid business with a good credit history, you’ll enjoy the luxury of a choice of multiple and suitable lenders that will fulfill your financing needs.

Items to consider when seeking business financing:

  • Research multiple lenders interest rates.
  • Ask about any and all fees associate with initiating and terminating the loan? Are there any early re-payment penalties?
  • Look for reputable lenders. Check reviews, and ratings of lenders.
  • Consider nontraditional lending solutions.

The online lending marketplaces can save you the hassle of having to do all the legwork yourself.  They aid borrowers with a review of multiple funding options from several institutions focusing on your business’s specific requirements and needs.

What a Lender Looks for in your Business.

Lenders are just like any other businesses, except unlike most, their product is cash, they are trying to make a profit  And similar to most reputable businesses, operate in a competitive market place, and want to do the right thing for their clients and meet their needs. They to want repeat business.  When a business successfully repays their loan, both parties benefit and profit.

 

 

 

Generating Leads with Email Drip Campaings

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Email Drip Campaigns for Generating Leads and Increasing Sales!

 

By: Peter Spoleti, Vertex Markets, October 29, 2020

Sales and Marketing, Email Drip Campaign

The fundamental goal of any email marketing campaign is to draw in relevant prospects and subscribers, those that will react to your call to actions.  But in this competitive and unique environment your target market has all the control over which emails & content they’ll engage with.  So, thinking your going to be succesful by jumping into the large pool of their inbox without a well though out strategy and topics they’re interested in isn’t going to work.

You need to have a strategy to keep your subscribers engaged and with a goal of building your list as a top priority when developing a successful email marketing campaign. A great way to achieve that goal is with an email drip campaign.

Email drip campaigns, when effectively designed provide more than a continuous flow of content.  There goal is to guide your readers through a stream of strategically designed messaging with the purpose of educating and motivating your audience to begin a conversation and relationship with your company.

An effectively designed email drip campaign will move your prospects organically through their decision-making processes.  Ending your prospects journey with them being fully committed to engaging in a conversation to discuss their company’s needs, while transitioning them into your sales processes. 

What is an Email Drip Campaign?

Email marketing is a great way to communicate with and learn more about your prospects and customers.  An email drip campaign automates that process based on a specific schedule or certain actions from your audience.

It is an automated group of emails programed to be systematically sent based on a user’s actions or a specific schedule.  Its meant to deliver the right information to the right individual at the right time.  Such as, a visitor who has multiple times visited your website’s products page but hasn’t made a purchase or inquiry on your services, they’ll receive an email offering a demo or additional information.  While someone signing up for your email or content list receives a welcome email and then a couple of days later receives a recent blog post or newsletter.

Drip emails are created in advance and may be personalized with the prospect’s name and/or other information targeted to that prospect.  According to research from email marketing software provider Emma, “relevant, targeted emails produce 18 times more revenue than non-targeted emails, since users are more likely to click the links in the emails; drip campaigns produce a 119% increase in click-through rates over regular campaigns”.

What makes an email drip campaign work?  

Fundamentally, email drip campaigns are easy to impliment when using an email marketing or marketing automation SaaS company, such as active campaign, or mail chip.  You’ll design the triggering mechanisms which initiates the drip campaign process and the automation takes over.

Your able to segment your email list to suit your specific strategy and assign different triggers to different segments, assuring your content is as relevant as possible to the recipient.

Email drip campaigns are an effective way to stay on top of your customers or prospects inbox and subsequently their mind.  While advancing their journey through your sales process with relevant strategic content.

Some Examples of Commonly used Email Drip Campaigns:

  • Onboarding emails are delivered early during the customer’s journey with your company, providing information about your business. Making customers aware of important information on your company or products or services and touting your unique attributes that make you stand out amongst the crowd.
  • Welcome emails are used for new subscribers to your email list to introduce your brand and your community to them.  You can also use this email to deliver a discount or free offerings as an incentive for them continue their journey and conversation with your company.
  • List building, using an email drip campaign to target your unique website visitors, encouraging them to opt in to receive content, emails and push notifications.  This process combined with identity resolution, is a great way to grow your email list and community with engaged people.
  • Subscription renewals & Shopping cart abandonment, implementing an email drip campaign for these items can directly and immediately effect sales.  Notification of subscription renewals is an opportunity for you to thank your customers for their business, remind them of their renewal date and request updated payment information if necessary.  Shopping cart abandonment is when a visitor places a product in their online shopping cart then leaves without making the purchase.  By using a email drip campaign to automatically send an email to these visitors, reminding them what they have in their cart, may help close the sale.

Some benefits of an email drip campaign?

Email drip campaigns have multiple benefits when designed and implemented properly.  Design your campaign so that each email stands on its own but builds on prior emails taking your audience on a strategically planned journey resulting in a specific action by your reader. 

  • Saves you time, a major benefit of an email drip campaign is that once set up the emails are automatically sent out requiring little time for maintenance and adjustments. Freeing up your time for other pressing issues.
  • Move prospects and customers through your sales funnel.  Email drip campaigns are a highly effective automatic process for converting prospects into customers with out using a heavy hand. Strategically moving your prospects through their sales journey step by step by answering questions and providing product knowledge.
  • Promote branding, products, and content. If your producing content (and you should be) email drip campaigns are an excellent way to build your brand, get your content in front of your customers and prospects.  You can create content to create brand awareness, new product information, showcase company initiatives, and address customer or prospect issues.
  • Increase engagement and Nurture leads.  Email drip campaigns increases prospect & customer engagement by providing a continued conversation between your company and your community, providing you the opportunity to get to know them and their needs.  This ongoing conversation provides your company a strategic opportunity to advance prospects through your sales funnel towards purchase.
  • Abandoned cart & reactivating disengaged contacts.  Every contact list has its percentage of disengaged contacts.  A targeted email drip campaign can get some of them off the bench and part of the conversation.  Many individuals place items in online shopping carts, then abandon them before checking out.  You can set an automated drip email reminder prompting them to finalize their purchase. 

These are just a few of the many ways email drip campaigns can benefit your business across many departments and processes.

Steps to an Effective Email Drip Campaign.

We’ve outlined just a few of the benefits of an email drip campaign, here are the steps to use when creating your drip campaign.

  1. Know your Audience and Set your Goal.

Being able to direct your campain to a well-defined audience is the most important part of an email drip campaign. The first step of your campaign design is to identify who you would like to talk with.  Do you want to generate leads, get them to buy, or introduce a new product or service, or something else?  After specifying your audience, you can decide which triggers to be used for your campaign. 

There are few main types of triggers, action trigger, criteria trigger, or demographic information. 

  • An action trigger is the classic email drip trigger.  Someone subscribes to your newsletter, fills out your form, makes a purchase, downloads the trial version of your app, etc., and it triggers your drip campaign.

The idea is a prospect or customer is visiting your site or your app and engaging in some manner.  What ever that manner is, you’re collecting their email address and hopefully some additional information as part of that interaction.  You then drop them into a relevant email drip campaign to start the conversation. 

  • Criteria Triggers are a little more complex.  Many of the times, criteria triggers rely on back end information.  Someone enrolls in a trial period for your product or service, but never started using it, your current client’s subscription is coming to an end, you send out a reminder and request updated billing information if necessary,  an event or selling season is approaching and you want to inform your customers who attended your last event or shoppers from your last selling season, etc.

In these examples, your email drip isn’t directly triggered by a specific user action.  Instead, it’s triggered by some sort of criteria that the user meets. That criteria is important to you in some way, so it triggers an email drip which will hopefully evoke the desired response from the user.

  • A demographic trigger is initiated by natural occurrence a birthday, anniversary, etc., that triggers the drip wishing a happy birthday, etc., with some sort of enticement to initiate an action from the recipient.
Using Your Triggers.

In any of these examples your trigger tells you a great deal about your audience.  Since the trigger is mainly the motivation for the campaign, you should have a good sense of your audience and what motivates them. 

The goal is to figure out how to get them to perform your desired results.  Your desire is for them to re-engage with your company, for them to learn more about your busines and your mission, drive increased and repeat traffic to your site, or drive sales from prospects.  Learning & knowing who you are targeting and what you want them to do will help you decide exactly which type of campaign to create. 

Why Target your Audience?

Targeting is a great way to personalize your campaigns while providing strategic company information designed to build brand loyalty, strengthen relationships, and enhance and move them through their sales journey. 

Creating a successful email drip campaign is setting and measuring your goals up front.  A defined goal enhances the planning process making it easier to layout your campaign components.  Be specific when setting the end goal so it can be measured, and then make sure you measure it. 

For example, if your goal is to create a lead gen drip campaign.  Think about which actions you want qualified leads to take.  Eventually your goal should be to generate a sales call or setting up a demo with a targeted decision maker.

By the time your prospect arrives at the end of the drip campaign, the should have a clear picture of their specific need or problem, how your company can address those issues, and how you can work together to solve those problems.  Your campaign should eliminate as many of your prospects potential surprises by working backwards from your original goal. 

  1. Segment your Campaign.

Segmentation of your email list will increase the effectiveness of your campaigns. If you aren’t segmenting your email list, consider doing so. Targeted emails translate to a more effective email drip campaign. 

Not all your customers or prospects have the same needs, concerns or issues.  Prospects with a better understanding of their needs who are nearing the bottom of your sales funnel should be seeing different emails than those who have just been introduced to your products or services.  With a segmented email list, you are better equipped to address their individual needs.

Create multiple parallel campaigns, the majority of the content can be consistent but tailor each campaign as much as possible to each specific segment, addressing their needs, and concerns.

For example, create tailored landing pages for each campaign you are acquiring emails from.  Then you can better identify & segment your list, to better develop unique email drip campaigns depending on which page each user was engaging with when joining your list. 

  1. Creating the emails for your campaign.

You’ve identified your audience and set your goals now you can use that information to create the emails for your campaign.  As with any email marketing, the emails making up your drip campaign need to be well thought out and designed to grab people’s attention, be helpful, and have a clear call to action.  Keep in mind, even though your creating all your emails at the same time, your audience will be seeing them separately, so they have to stand on their own, stand out from the competition,  and accomplish your goals. 

  • Your Email Content Matters Most.

An email drip campaign isn’t going to be successful unless the content of those emails is well thought out and very good.

Your emails need to add value, don’t make them spammy or your conversion rate will suffer.  Many people don’t take the time to read the whole article they scan it so make it easy for them to scan, use subheadings, bold sections, etc.

  • Provide the information your prospects need to move forward.

When creating your emails for your drip campaign, ask yourself what does your message, for your audience, have to me to get them to take the journey you want them to?

For example: if your goal is to sell your SaaS product, you can create emails that highlight its functionality and include client testimonials on how they filled needs and solved problems. 

If your goal is to sell a product your goal should be to gain your prospects trust that your products will solve their problems.  To accomplish this, create educational emails addressing areas of potential concerns of your product, and include proof on how your products will adress their concerns and solve their problems.

Some tips to help you create compelling emails for your drip campaign.
  • Subject Line.

Your email subject line is the fist opportunity to grab your audience’s attention, and a deciding factor in your open rate.  It needs to pique their interest, make them want to see what your email has to say. 

Subject lines should be short and to the point.

  • Email Copy.

After grabbing their attention and getting them to click on your subject line.  Your email content is the next most important part of your email.  You want it to be appealing to the eye and catch your readers attention, but a flashy design isn’t going to compensate for poor copy.  Your copy is the most important component of  your message make sure it is well though out.   

The competition for your audience’s attention is steep and they don’t spend much time on each email, keep your copy short, and to the point.  Concentrate your email copy on what your audience cares about, address issues they are facing, and how your products or services can solve those problems, while moving them through your sales journey. 

  • The Design of your Email.

Your subject line and copy are more important then your design.  It is important your design doesn’t put off your audience, or is distracting from your copy. Also remember that many people consume their emails through their mobile devices, make sure your design is mobile friendly.

  1. Set Campaign Delivery Strategy & Launch your campaign.

Now that you’ve identified your audience, segmented your list, set your goals, and created your emails, it’s time to set your frequency, strategy and timing of your emails and then let your marketing automation solution take over the heavy lifting.

There is no “one size fits all” rule that works here.  Generally, you should start with higher frequency and slow down as time goes on.  

As for your campaign sending times, refer back to your newsletter or other email campaign statistics to see if any specific time of day produced higher open rates for your other campaigns.  There isn’t a universal “best” time to send an email, each audience is different, analysis your audience’s preferences and work within those parameters. 

You can send email drip campaigns including, blog post, articles, whitepapers, case studies, etc., to people who have already been on your list & to leads who are still gathering information.  A more consistent, daily, weekly, or monthly, campaign can keep your brand top of mind for when they are ready to take action. 

For those leads at the lower end of your funnel you can utilize content to address questions and potential objections which might slow down their sales journey.  These emails are best delivered based on triggers, like link clicks, open rates, or lead qualification.  As prospects near the decision-making part of the sales process, they’ll need answers quicker, match their response pace, or you’ll lose their interest to someone who is keeping pace.  

  1. Analyze, Analyze, Analyze your campaign.

You have to analyze your campaign both during and after its implementation to collect accurate data on what’s working and what’s not. Use the analytics to pinpoint areas where your campaign performed well and where it needs improvement. 

Besides the obvious, open rates and clicks, you should be measuring, return on investment, total landing page clicks. 

One of the easiest ways to capture key analytics is to tag links in your email with UTM parameters, which ensure information is passed on automatically to Google analytics. 

Conclusion.

Email drip campaigns, when done right, are a great way to create an effective marketing campaign that can create a good ROI, because of their automation.  They can also help advance a prospects journey through your sales funnel.  Since, not all prospects who click on your ads, read your content or visits your site are ready to purchase your products or services. 

But if you can engage them with a drip campaign, that nurtures them through your sales funnel, and builds your brand, you can significantly increase the number of clients you can generate from your marketing efforts. 

Remember though email drip and marketing campaigns don’t always produce an immediate ROI.  It is thought to be one of the most effective methods to move people through your marketing funnel and help to build your brand.  

Suggested Reading:
Generate leads with a digital sales funnel 
SEO for Small & Med Businesses