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Know More About Lenders Open for Business

It’s not only business credit card issuers that are open for business in 2021. Banks, credit unions, online lenders and fintechs are willing and able to extend cash to small business owners, said Lendio CEO Brock Blake.

Sure, there are more restrictions in certain industries and tighter underwriting standards for small business lending, but lenders have an appetite to lend, he said. Loans doing well on Lendio include cash flow, asset-backed, and Small Business Administration loans noted the executive.

“We expect the SBA to increase the guarantee from around 85% to 90%,” said Blake. “That will increase confidence on the part of lenders” to issue an SBA loan.

With increased liquidity, more lenders will serve small businesses. That means borrowing will be cheap for business owners with good credit scores. Banks and credit unions will play their part in business lending as well, but alternative lenders and fintechs are expected to be the major issuers of loans in 2021. After all, investors aren’t getting much yield outside the stock market and with less COVID-19 uncertainty they are willing to lend their money instead.

“A lot of money is flooding the non-bank lending market because bond yields are low,” said Matthew Gillman, CEO of SMB Compass. “The new year is exciting for alternative lenders. There will be a lot of liquidity but not in the form of banking financing.”

Key takeaway: Lenders are open for business and are focused on cash flow, asset-backed, and SBA loans. Alternative lenders, in addition to banks, will be options for small business loans.

Another round of PPP to get through the winter, Small business owners have carried the brunt of the pandemic, particularly the retail and hospitality industries. Early on, the government implemented the Paycheck Protection Program to help struggling business owners. It gave small business owners forgivable loans if they used the money to keep workers on the payroll. A popular program, it was exhausted quickly.

Since then, the number of coronavirus cases is skyrocketing and states like California are in widespread lockdowns. After months of wrangling, more aid is on its way. Last week Congress passed new legislation, appropriating $284 billion in PPP loans to small businesses. Small business owners who received a PPP loan but saw sales fall 25% or more can apply for a new PPP loan.

“Our expectation and hope was that those in Washington would stop playing politics and focus on the small businesses who need another round of PPP to make it through the winter,” said Blake. “If it didn’t pass it would be a very long and dark winter. We would see a lot more business closures, more than thus far.”

Key takeaway: The Paycheck Protection Program was a vital lifeline during the early days of the pandemic. While Congress had been slow to issue any new stimulus, it finally delivered relief to small business owners.

Technology plays a leading role in managing finances, If business owners learned anything during the pandemic it was the need to pivot and adapt in near real-time to customer demand and need. When cities across the country shut down in the early days of the pandemic, physical retailers had no choice but to move business online.

Technology that enabled them to do that with ease will continue to play a major role in operations in 2021. This includes cloud-based software that helps businesses launch e-commerce sites, implement self-service ordering and accept online and contactless payments. That was the case during the pandemic with credit card processors, POS providers, and e-commerce platform operators all in demand. That trend will continue unabated in 2021.

From artificial intelligence that predicts when invoices will get paid to POS systems that track and automatically reorder inventory, business owners will continue to have access to low-cost software that streamlines operations and enhances the bottom line. “The pandemic has created new pockets of opportunities and accelerated traditional business models embracing of new technology,” said Gulati.

Key takeaway: Advances in cloud-based software will continue to help business owners streamline processes and enhance the bottom line in 2021.

‘Do-it-together’ is the new mantra, While DIY is common among business owners, many are realizing they could use the help of a partner. Thanks to advances in technology, they can do it on the cheap.

Take accounting for one example. Ben Richmond, country manager at Xero, the cloud accounting software company said business owners are embracing a “do-it-together” model when it comes to certain business processes such as accounting or marketing. They are leveraging technology and the expertise of other businesses to get through the pandemic. They are much more aware of the need to be proactive in terms of cash flow and funding; being reactive doesn’t work in an environment undergoing unprecedented upheaval.

“Business owners are not trained bookkeepers and need to know where they are and feel in control, even if the story is bad,” said Richmond. “We’ve seen an accelerating trend of ‘doing it together’ to help navigate the minefields that are in front of them.”

Key takeaway: Many small business owners no longer want to go it alone. They recognize they aren’t experts in everything and are leveraging technology and help from professionals to get things like accounting done.

Credit Card Issuers Raising Credit Lines

There are reasons to hope for a prosperous 2021. Find out why small business owners and lenders are optimistic about business financing. Small business owners were dealt devastating blows in 2020 but there are reasons to look to 2021 with optimism. Credit card issuers and lenders are open for business again, which means funding will be easier to come by. Technology will continue to play an important role in helping small business owners manage cash flow.

This article is for business owners who want insight into the small business financing trends of 2021. Despite the devastation brought on by the COVID-19 pandemic, there are reasons for small businesses to be optimistic heading into 2021: A vaccine is rolling out, another round of the Paycheck Protection Program is coming and lenders are open for business again.

Capital One recently surveyed small business owners and found that 67% expressed confidence that their businesses will return to pre-pandemic operations and revenue in 2021. Meanwhile, 60% of small business owners think the outlook for the U.S. economy will be favorable in the new year.

“Folks are feeling a lot more optimistic in 2021,” Sameer Gulati, President and COO of Plastiq told business.com. “Things should start reopening and growing again in the third or fourth quarter.”

That’s not to say business will be back to normal for the typical small business owner. Millions of enterprises have been hurt during the pandemic, many forced to close their doors forever. But, the ones that have been hanging on and surviving will have more financing options than were available in 2020.

Take business credit cards and loans for starters. As soon as the pandemic hit, U.S. lenders and credit card companies reacted by slashing credit limits and slowing down lending. That made a bad situation untenable for many small businesses who needed access to credit to keep operations going.

“Sometime in March, traditional credit providers had a massive knee jerk reaction and pulled back hard. Loans became extremely hard to get, increasing the rate of business failures,” said Gulati. “It was the first time in the credit card industry that line reductions happened in a matter of days and weeks.”

During the recession of 2008 and 2009, it took banks and credit card companies months to react, but advances in technology and integration with business bank accounts make it much easier to see the red flags in 2020 and react.

As we put 2020 behind us, credit card companies are better able to gauge COVID-19 risk and are more comfortable extending credit.

“We’re starting to see more progressive card issuers increase lines again,” said Gulati. “Credit issuing partners are telling us they have big plans for 2021 and come to us for help figuring out when it’s safe to lend and increase lines again.”

But, increased credit isn’t available across the board. Gulati said credit lines are increasing for sectors that have held up during the pandemic including e-commerce, healthcare, construction, and professional services.

Key takeaway: Credit card companies were quick to lower credit lines and hold back lending, but with less uncertainty about the COVID-19 impact, they are increasing credit lines and issuing credit again.

Donald Trump’s Small Business Platform

Trump is running on the message that he wants to bring the U.S. economy back to its pre-COVID levels. Trump has claimed many times that he was able to steward the country to an unprecedented level of prosperity.

“This president has helped small businesses thrive by removing burdensome regulations from the Obama-Biden administration, allowing additional tax deductions, and helping small businesses keep their employees on the payroll throughout the pandemic with the Paycheck Protection Program,” said Courtney Parella, a spokeswoman for Trump’s re-election campaign.

Whereas Biden has proposed a plan for the next four years, Trump has campaigned on the accomplishments of his first term. Though we pushed the Trump campaign for information on the president’s plans for the next four years, we did not receive any response. Based on our research, however, here are some of the points Trump is running on as they pertain to new small businesses:

Aspirations of a surging economy
For most of his time in office, Trump has had a strong economic reality as part of his message to the American people. A poll taken by CNBC and Survey Monkey back in February showed that nearly two-thirds of small business owners “approved of the way President Trump [was] handling the U.S. economy.” The campaign also highlights that, in 2019, new business applications rose to nearly 3.5 million, marking about a 20% increase from three years earlier.

By the spring, the economy had taken a massive backslide, with millions of people making initial jobless claims each week for several weeks. Though times have been tough, Trump emphasizes that he and Senate Republicans pushed the CARES Act, which created the Paycheck Protection Program, provided $350 billion in forgivable SBA loans and issued $10 billion in emergency grants, among other things.

Though there hasn’t been a comprehensive explanation of Trump’s platform moving forward, the campaign has released a list of his economic agenda on the campaign’s website.

Trump’s tax plans
Trump may have run as an outsider in 2016, but his tax policies are very similar to long-established Republican efforts. With the largest tax reform legislation already on his résumé as president, Trump has begun floating some ideas that he may act on if reelected. Though specifics aren’t easy to nail down, the president has shared his interest in a potential payroll tax cut, as well as a cut to the individual tax rate to 15% and a reduction to the capital gains tax.

As for small businesses in general, Parella noted that the Tax Cuts and Jobs Act established a 20% tax deduction that pass-through entities and other small businesses can take advantage of on up to $326,000 of income. More than 90% of U.S. small businesses can claim that deduction, according to the campaign.

Healthcare under a Trump second term
Republicans in Congress have long held that they want to repeal and replace the ACA, and Trump echoes those sentiments. Though neither side has offered a concrete plan beyond the “repeal” part, the campaign is touting the president’s previous efforts that can affect small businesses.

One issue that many small businesses may be familiar with is the expansion of health reimbursement arrangements and association health plans that give smaller companies the ability to group their coverage. By doing so, they can increase their buying power and earn lower-cost health insurance benefits for their employees.

Other potential pro-small business healthcare moves that the president may consider in a second term are the reduction of prescription drug prices and health insurance premiums, and the elimination of surprise billing.

Key takeaway: Trump has largely been able to draw on the state of the U.S. economy before the pandemic. If reelected, he would likely push for the end of the ACA, add more business tax cuts and try to find a way back to an economic normal.

Joe Biden’s Small Business Platform

After having worked beside President Barack Obama, Biden has campaigned partially on his experience as the second in command during a period when the federal government worked to dig itself out of the Great Recession and forge the ACA.

Despite weeks of attempts, we were unsuccessful in getting a response from the Biden campaign about the vice president’s platform. Nonetheless, we broke down his various proposals based on the information on the campaign’s official website.

Biden’s economic restructuring
With the nation’s economy still hurting from the pandemic, Biden is confident that he and his running mate, California Sen. Kamala Harris, can right the ship. Biden proposes he’ll do that for small business owners by helping that segment of the economy gain access to funding to start new ventures and keep existing ones afloat.

One of his proposals includes the creation of a “True Small Business Fund” that would provide $60 billion to small lenders and community banks to quickly get money into the hands of local businesses. His platform also calls for a ban on well-to-do businesses gaining access to programs like the previously run Paycheck Protection Program. When plans like that get put into place, Biden wants the terms to benefit the small business community.

Another key point of Biden’s economic plan for small businesses is a push to help businesses owned by Black, Indigenous and people of color (BIPOC) get started. It’s well documented that BIPOC-owned businesses have a difficult time securing funding from traditional lenders, and when they open, they have been closing at a rapid pace due to COVID-19, according to a working paper from the National Bureau of Economic Research. As such, Biden said he will “remove barriers to participation in our economy, expand access to opportunity, and fully enforce the policies and laws that we already have on the books.” The chief part of this proposal is the creation of a Small Business Opportunity Plan, which would provide more than $150 billion in loans and venture capital for BIPOC entrepreneurs.

How taxes would change in a Biden administration
Biden contends that Trump “rewards wealth over work,” citing the Tax Cuts and Jobs Act as a de facto tax jubilee for the rich. By contrast, Biden says his tax plan would keep taxes level for anyone making less than $400,000 a year, enact “more than one-dozen middle-class tax cuts” and raise the corporate tax rate from 21% to 28%, among other proposals. In addition, Biden’s plan would tax foreign earnings of U.S. companies and impose additional taxes on companies that outsource jobs to other countries.

Tax savings would come in the form of various tax credits for major life milestones, such as buying their first home, and ensuring no family spends more than 8.5% of their income on healthcare. Biden is also proposing up to $8,000 in tax credits for low- and middle-class families to pay for child care and an equalization of tax benefits for retirement savings between the wealthy and low- and middle-class households.

Biden’s healthcare plans
Having helped ensure the ACA’s passage in 2010, Biden is running on a promise to keep it intact. Biden’s campaign website says he plans to “build on the Affordable Care Act by giving Americans more choice, reducing health care costs, and making our health care system less complex to navigate” by creating a Medicare-esque public option. If this option is enacted, he believes all small businesses will be able to “afford coverage for their employees.”

Key takeaway: Biden’s multifaceted plan proposes more taxes for the rich and the continuation of the ACA.

What Issues do Entrepreneurs Care About?

With the 2020 presidential election nearing, find out which candidate offers the best agenda for new business owners. Both Biden supporters and Trump supporters believe this will be a transformative election for the United States. The two candidates have vastly different views on everything from healthcare to taxes. Regardless of your final determination, you should vote in this election.

This article is for small business owners who are seeking to understand which presidential candidate has the right platform for new businesses.
As we inch closer to the Nov. 3 general election, hopeful entrepreneurs looking to join the other 32 million small businesses in the U.S. know by now how important this election will be. With a decision looming between Republican incumbent President Donald Trump and Democratic nominee and former Vice President Joe Biden, each vote could have major implications for your new venture. So, before you step into the voting booth or mail in your ballot, it’s important to be clear on both candidates’ positions on issues that affect small businesses and entrepreneurs.

Starting a new business can be a daunting task under normal circumstances, but 2020 has been anything but “normal” due to a mixture of catastrophic events, racial unrest and a global pandemic that has killed more than 215,000 Americans. With additional stimulus measures proving unlikely and continued (albeit gradually lifting) restrictions on how businesses operate, small businesses have had a rough go of it.

Looking ahead to the next four years, fledgling small businesses and established ventures alike are paying attention to some key issues that could mean the difference between keeping the lights on and shutting down for good.

The economy
After months of social distancing restrictions (and, in some cases, mandated closures), it may be hard to remember how 2020 began. Before the coronavirus reached U.S. shores, the economy was on a resurgence of sorts, bolstered in part by the Tax Cuts and Jobs Act of 2017. That legislation, along with continued Obama-era economic trends, boosted the confidence of consumers and investors. However, once COVID-19 started affecting thousands (and, later, millions) of Americans, some state governments ordered many businesses to shut down, resulting in unprecedented unemployment numbers and the sudden cratering of any economic gains earned since 2008.

As entrepreneurs and small business owners consider their vote, many look back to past stimulus efforts by the federal government, including the Payment Protection Program and stimulus checks that resulted from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Though negotiations for another stimulus package have been sidelined by political jockeying, millions throughout the country support the idea of buoying individuals and businesses with federal money. Regardless of what lawmakers end up supporting, small business owners of all stripes know some assistance is desperately needed.

Taxes
History typically shows that the Republican Party wants to cut taxes in every form, while Democrats often have plans to increase taxes to cover government spending in other places and programs. While the Trump administration can claim victory in this area with the passage of the Tax Cuts and Jobs Act, many have seen this key piece of legislation as a giveaway for the wealthy that left the working class and small businesses with little to show for it. As an entrepreneur, your taxes will have a major effect on your take-home pay.

Healthcare
Federal policy directly affects the healthcare benefits you offer your employees. For a decade, the U.S. healthcare system has operated under reforms enacted in the Affordable Care Act (ACA). While it has provided millions with the chance to obtain reasonably priced healthcare, the ACA has created its own set of problems, leaving many lawmakers wondering what changes need to be made, with potential solutions typically falling along party lines. As a new or potential small business owner, you should pay close attention to the coming election, since offering good benefits is a great way to attract and keep good employees.

Key takeaway: There are many issues that affect entrepreneurs and small businesses, but the economy, taxes and healthcare are often top of mind.