Needs a Little More Light

Every business has to struggle to break free from their past in order to maximize its potential. This requires fixing past missteps and learning new skills.

Based on your Business Assessment Scores, it would appear that you are in this phase of development. In order to grow to your maximum potential, you may need to take a step back so you can move forward. We’ve all had obstacles get in our way that we’ve needed to clear.

We want to introduce you to Ivan, who may have been experiencing the same challenges you might now be facing.

Ivan's Story

“The business is doing fine and needs to expand, but banks keep turning me away. I’m frustrated and angry. I know that I didn’t always make the right decisions, but that was then. Why do I have to keep paying for it now?”

Ivan a boutique fitness studio that has been successful in recent years. To continue to grow, Ivan needed to expand beyond his current location. Ivan is a people person, who has a lot of friends and had a lot of fun. He wasn’t always careful with his credit, so he’d taken some hits. He got his current location from a friend, but when he came to us, he needed capital to grow. Banks weren’t willing to work with him, so he felt stuck and frustrated.

Many small businesses don’t realize that their personal credit can have a negative impact on their ability to get a business loan especially if they are new and do not  have sufficient assets to use as collateral. This was the issue that Ivan was facing.

Ivan’s story

Curse of Personal

Ivan’s case is all too common. Personal credit score impacts access to business capital for owners, an unfortunate truth in small business lending. David wasn’t in terrible shape, but it was going to take a few years before he would be able to reach the magic 700 number.

Why is personal credit such an important factor, even if the company has a good track record? It’s all about risk. When getting a small business loan, banks worry about how a principal will react when challenged by personal debt.  Will his or her behavior affect the business?

Here a the five things you can do to improve your credit score:

    1. Pay Your Bills on Time
    2. Get Credit for Making Utility and Cell Phone Payments on Time
    3. Pay off Debt and Keep Balances Low on Credit Cards and Other Revolving Credit
    4. Apply for and Open New Credit Accounts Only as Needed
    5. Don’t Close Unused Credit Cards

How Did We Help Ivan?

Started Fixing His Credit

First, we went through the 5 steps above to get him started on improving his credit and how he can avoid wasting money. Then, we explained to him his options with alternative lenders.

Alternative Lending

Even if your small business has been denied a loan, you may still have a good chance of obtaining funding form alternative lending sources. These non-bank, online lending services offer alternative sources of funding with less strict requirements. 54% of business with credit scores less than 700 are more likely to apply to an alternative lender, according to the Federal Reserve

50% Alternative Lending

While getting approved may be easier, the rates will almost certainly be higher. Plus, there are also additional fees attached. There is no simple way around it. It’s not necessarily bad, but you need to be aware of the impact that will have on the business.

50% Peer-to-Peer

Crowdfunding and Peer-to-Peer can offer an alternative if you are denied a small business loan. They often offer lower rates than online lenders because the risk is distributed across a wider group. Crowdfunding & Peer-to-Peer lending is generally best for smaller, micro-loans. Why? You will need to do the heavy lifting.

Made Some Trade-offs

We needed to make some trade-off decisions so we could get the cash we needed at blended interest rate we could afford. Rent and labor were his two largest expenses. As such, we had to make some compromises. The first was to reduce the square footage he needed, and by doing so, it cut back on the labor costs as well.

Affordable Blended Rate

Like we said, we got 1/2 the loan from an alternative lender. It was a steep APR of 17%. But, we could offset the impact of this rate through the peer to peer effort. We received 15% from 0% APR non-profit lender, and 35% from a 10% Peer-to-Peer group. The net rate was 12%, which near the upper end of the SBA range.

Ivan secured the loan and was able to expand.  He was able to grow at 50% over the time period, so he more than recouped the gain from the loan. We are so proud of Ivan. He was able to expand his business and fix his personal credit.  So, when he was ready to expand again, he was able to achieve much better rates.

“You know, I went to ProStrategix feeling pretty awful. I was beating myself up for things I couldn’t change. But they didn’t judge me. They took the time to explain everything to me in a simple way that I could understand. After we went to the bank, I felt so much more confident. After we received the loan, I was thrilled.”

How Can We Help You?

(646) 543-7804

available from 9:00 – 5:00

Address 505 W. 37th St. New York, NY 10018