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In this video, I will show you the best places to go to if you’re a business startup looking for loan, and your using your Employer Identification Number for the first time, also known as your EIN. Hey everybody, welcome to my channel. I am your host, Leo Landaverde, business coach and outsource CFO, helping you scale your business. If you are ready to grow your business to seven figures and beyond while creating the financial freedom and the lifestyle you want, then don’t forget to hit the bell and subscribe to my channel and you’ll be notified every time a new content comes out.
Hey everybody, welcome to today’s video. In today’s video, we’re going to talk about the best small business loans for your startup, particularly if your using your Employer Identification Number, also known as your EIN for the first time. I’d be remiss if I didn’t start off the bat with probably the best place to go to for your small business loan, especially a startup, then to the SBA and smart business loans has figured it out. That’s all they do. Smartbiz.com, smartbusinessloans.com. It’s probably the best place to go to. You’re not going to beat their rates. Yes, this requirements that are a lot more stringent than most places but you has the best chance with the best rate of getting a loan for your startup with the SBA. Now, if you haven’t watched my other videos, by all means, subscribe to my channel, but also they’ll be the link below and also at the end of this video. I did a whole comparison between the 78 loan and the 504 loan, and they are powerful loans. Both of those loans you can get here, and here is why. If you just look at 4.75% to 7% for a business loan, that’s pretty awesome. You can get up from $30,000 up to $5 million, and from 10 to 25 yearly payment terms. Let’s just do a side-by-side comparison right on the website.
So, with non-bank lenders, and we’re going to go through all those, and there is a place for everybody, but the reason why you want to go here is because you can’t beat these rates. When you’re looking at 9% to 36% on a traditional business loan for the non-bank lenders, and the cash advance are going to cost you 20% to 100% of your cash that you borrow, so if you’re borrowing 100,000, you may actually be paying $100,000 in fees, compared to an SBA loan, could be anywhere from 5% to 10% in a bank. Banks are not far behind, but they’re not as competitive as the SBA loan. So, there you go. The funding process 7 to 14 days versus one to seven days in an SBA loan. It says here in the website that it’s going to take seven days.
It doesn’t take seven days. It probably is going to take about 30 days. And that’s advertising purposes. One to five years with a competitor and non-bank lenders, less than a year with merchant cash advances which are also known as MCAs, 10 to 25 years in SBA loans. I mean, just do the math here, right here. This to me, if you look at nothing else, you will look at the bottom here. The typical payment for $100,000 loan, when you’re working with a non-bank lender, which are most, is 5,000 a month versus 12,000 a month, if you’re doing merchant cash advances, and there’s a place for those. And there are times that you probably won’t get a loan from the SBA and your choices are limited, you go there, versus an $1,110 payment per month with an SBA loan for 100,000, and beats the bank at 2,075 average.
Now, this is just an illustrative purposes. There’s a lot more that goes at stake, like your collateral, your capacity to pay, your debt service coverage ratio, et cetera. So, number one, if you want to pay the lowest monthly payment, it’s going to be an SBA loan. Number two, Lendio. Now Lendio, it’s more of a marketplace than a lender. So, they say that they work with about 75 plus lenders, they will even help you with your paycheck protection forum, but there’s no longer on August 8th or PPP funds basically.
And the program ended, all you have left is now the PPP loan forgiveness. So, they can help you with that. So this is dated now. But it’s a marketplace, right? So when you go to a marketplace, what you get is options. If options is what you want, you’re probably not going to get a better place than Lendio. So the strengths are a fast application process, but you also going to pay high interest rates as I said before. There’s a place for it if you are a startup. If you are a startup means that you haven’t really used your EIN number, your Employer Identification Number yet, so you really don’t have that many choices. But this is a good place. If you need money right away, this is great. Okay. So the next ones are going to be BlueVine.
So, this is their website. And let me tell you why BlueVine is so popular. And this is why. So, I’m an accountant and I have an accounting and advisory practice, and I work with QBO. 90% of my clients are with QuickBooks Online. And what makes QuickBooks Online so sticky is that they have an entire ecosystem where you can connect apps. Earlier today somebody wanted to know if there’s a cashflow forecasting app that they could connect with QuickBooks. Of course, there is. It’s a huge marketplace. But they also can hook you up with funding. So, if you just click funding, so you would just go to apps, right here under your screen for QBO, and then you go click on funding and then you will find an app, Fundbox and BlueVine. We’re going to talk about BlueVine first and then Fundbox, but they’re both in the marketplace.
What makes it so cool is that you don’t have to do much. All you have to do, say you wanted to go to BlueVine, ,you click on it and what it does, it tells you the description of what it is. They offer lines of credit, offers you everyday finances solution for your business, and you can learn more, right? My experience with BlueVine is that some people love it or hate it. But it has a lot more lovers than haters. So, what makes it cool is that they’ll just pull all your accounting data right out of QuickBooks Online, they’re able to give you approval right there based on your strength, they work with an algorithm that kind of analyzes your credit risk. And it’s really cool. So, strengths, low credit score requirements. You don’t have to have a super high credit.
And they’re pretty large loans. I mean, I’ve seen people have $200,000 worth of loans. But you’re going to pay some potentially large fees that go along with that. So, let’s go to their website right here. And so, they’re not offering, this is a new theme check-in. So, they’re becoming more like the bank. But they’re offering two major products as an invoice factoring in lines of credit up to 250,000. So, the credit lines with invoice factory, they are up to 5 million. Now, what invoice factory is, is you work with a client that can, rather than pay you when the work is done, they’re going to want to credit from you and then you’re going to give them an invoice, say for $5,000, and you can go with net 15, net 30, net 45, depending whether you’re working with a large national player.
If you’re working with Costco, it’s probably going to be net 90. Anyway, whatever the terms are, it means that they have up to 36 to 90 days to pay you in the meantime if you don’t have the cash. So, a place like BlueVine can help you if you’re a startup. You can leverage your invoices for immediate cash. And sometimes that’s what you need. Now, they’re going to charge you some fees, it’s not free. But there is a place for it, and they work in a kind of a formula, I don’t know, factory which could be anywhere from 3% to 5% of invoices on the face value of an invoice. And it can be higher depending on the nature of your business, the industry that you’re in, how long you’ve been in business, et cetera.
So, next, they kind of come as I want to punch a Fundbox. Again, as you remember, there’s Fundbox, right? Very very similar to Bluevine, except that they actually do better with people with bad credit. So, if you have bad credit, this is a great place for you. But with bad credit comes higher fees. Now it has a 790 ratings as of today’s video. It may change, but up there is a place for them.
So, here are the strengths. They have an automated application. Why? Because their API, they pull the data right out of your QuickBooks Online account, so they’ll have everything from you. If you already have an account with QuickBooks Online, you can be set up and ready to go for them to underwrite you within five minutes. Low approval requirements, fast funding, they put the money right into your account within two, three days. But there are some drawbacks, major weaknesses is low, maximum loan amounts. They’re not going to give you a whole lot of money. Unlike Bluevine, they’re funding less, maybe 10,000, 15,000, 20,000. Very very high APR. Remember, there is a positive correlation between low credit score and high… The lower your score, the higher the APR.
So, that’s that. So, there’s Fundbox, credit to move forward, and a pretty cool platform. You really don’t need to go here if you are already with QuickBooks Online. So, I’m just showing you what is so you can look it up yourself. Next is Kabbage. Kabbage, I learned, recently got acquired by American Express, and they’re becoming more of an ecosystem. They’re more like a bank than they are a lender. And remember that they’re going to be backed by American Express, which is one of the largest financial companies in the world. It is the most convenient lender on this list because it offers very fast funding. They want you to get your checking account with them, as it says here, they want to eventually get your insurance. They want to have you for everything.
So if that’s what you want, kind of like what you would get from a bank at slightly higher rates, then Kabbages is a great option for you. Next on the list. It’s going to be Accion. Now they’re really really good for startups, and they’re more of like a nonprofit. Very, very, very friendly. But then the drawback with places like Accion is that you won’t be able to get a whole lot of money. So, they are best for unique businesses. They really would only be able to get you up to $15,000.
If you need a whole lot more money than that, they’re probably not your best choice. They’re really in a business with a purpose as a nonprofit. You can see at the bottom that it says a 501(c)(3) is a nonprofit organization really for the betterment of businesses. So, there is a place for them, but these are more like microloans. So, we go to the next in the list as number eight, is going to be CanCapital. Think of this as a market who basically, they are the ones for merchant cash advances. I know that the is giving the industry a bad name, just because it’s not quite a loan that you get, it’s a factor. On the average, factor rates that I’ve seen is like 1.25 to one and a half times.
So let me translate that so you understand. So if you get a $10,000 merchant cash advance, it’s predicated on the future receivables. They’re not securing your actual receivables, they’re securing everything that is coming in the future, but rather than giving you an interest rate, they are going to give you a factor rate. So, if your factor rate say is 0.25, that means that your $10,000 loan is going to cost you 2,500. If your factor rate is 1.5, means that your $10,000 merchant cash advance is going to cost you $5,000. So be aware, right? It’s not cheap. But also, if you get money right away, you have to kind of count the costs. Now, the good thing about this is that the very, very low entry bar, you don’t have to have super great credit.
You can be a brand new EIN, brand new business, and be able to get a merchant cash advance. And if really your goal is to build your credit, there’s a whole video that I did about how to get business loans using your EIN number. This is one of the process that I go through. A lot of people at startups are sole proprietorship, and then they move up to a legal entity. That’s a whole part of the video that I did, so there you go. We go from smart business to Lendio, to BlueVine, Fundbox, Kabbage, Accion, and CanCapital. Thank you so much for watching today’s video.
Hey, please comment below and let me know which of this business startup loans is best for you, and why. Also, if you want to join a community of like-minded successful entrepreneurs just like you, then join our Facebook group at the link below where I share tips, tactics, and strategies of how my clients are growing their businesses to seven figures and beyond.
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