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Associated Press
2 days ago
- Business
- Associated Press
Gmegan Launches Practical Tax Planning Guide Tailored for Small Business Owners
Tax time need not be an occasion of worry for a small businessman like you. Managing your business and attending to daily activities leaves little time for contemplating the vast world of taxation. Good news: with a little advance planning and a few clever tactics, you can make tax time less stressful and earn a few extra dollars. Here, we will introduce you to a few practical and realistic ideas of tax planning specially designed to suit the needs of small business owners like you. Solo operator, veteran—our ideas shall keep you organised, make you earn maximum deductions, and keep your earnings just where you want them to be—in your pocket. Tax Deduction Understanding One of your best weapons in tax planning is to identify and take advantage of tax deductions. Tax deductions can reduce your taxable income by a very significant amount, thereby paying less tax. The question that lingers, though, is, as a small business entity, can one deduct anything? First, let us define a tax deduction. A deduction is an item that the IRS can deduct from your total income, lowering the taxable portion. In the case of small business ventures, usual deductions include office expenses such as rent, utilities, and office equipment and supplies such as computers and printers; travel and meal deductions when exclusively for business only; advertising and marketing expenses; and professional fees. To make your deductions as high as possible, keeping very detailed records of all of your business expenditures is important. That involves saving receipts, tracking mileage for business trips, and keeping track of other costs associated with owning a business. Small business accounting software or apps can make this easier to do. Deduction rules are convoluted, and not all costs can be deducted. This is why hiring a professional accountant can significantly enhance your experience. They can guide you through the details and help you use all that's available. On top of that, a skilled accountant will be able to coordinate your tax plan with overall finance planning to set you up for long-term success. Maintaining Accurate Records Good bookkeeping is at the heart of sound tax planning. Without excellent bookkeeping, you can forfeit deductions, pay an excessive amount of tax, or even incur penalties from the Internal Revenue Service. So, what does good bookkeeping entail for a small businessman? First, keep your business and personal finances distinct. Please consider opening a separate business checking account to ensure that business and non-business-related finances remain distinct. With that one simple step, dealing with income and expenditure is just that little bit easier to handle. Then maintain all bills and receipts for all that is business-related—office supplies, machine purchases, automobiles, and other business purchases all in one place. Organise them alphabetically to save a headache later when you need to grab something specific. You can even do this process easier with accounting programmes. Most will sort transactions automatically, create reports, and remind you before tax season starts. If you are not computer-literate, then just a simple spreadsheet will suffice as long as you are reporting regularly. Paperless records aren't an afterthought either. Store electronic bills or receipts with a special computer folder or using cloud storage, and make backups as frequently as you possibly can so that you'll never stand to lose anything. Please ensure that all records are maintained intact for a minimum of three years, as the IRS may audit returns within this timeframe. Some experts recommend keeping records for up to seven years to ensure thoroughness. When you're up to date with current, organised books, tax season isn't quite so hectic, and you're always aware of your company's financial soundness. Quarterly Tax Planning You're probably responsible for quarterly estimated taxes as an entrepreneur. Unlike pay withholding from an employee's wages, business owners and independent contractors are responsible for estimating the burden of tax and making four quarterly payments within a year. Payments can be made with penalty and interest charges for one payment that is missed. This is how to do that. Guess your yearly income. If your income is unstable, you can use last year's income or your best estimate this year. Guess those total taxes you're liable for, including income tax, Social Security and Medicare tax as a self-employed individual, and other taxes you're required to pay. IRS Form 1040-ES can aid with those calculations. Divide that by four to arrive at your quarterly payables, and note payment dates—April 15, June 15, September 15, and January 15 of the following year. Pay by computer with the IRS's Electronic Federal Tax Payment System, by mail with a check to Internal Revenue made payable with enclosed Form 1040-ES, or by computer using the IRS site. Make payment adjustments if your earnings go up or down within the year. A larger quarter means a larger payment. Better to pay too much than insufficiently—overpayment will yield a refund later, but underpayment will earn penalties. This can be a terrifying task, especially if this is a new thing to you. That is where a taxation accountant can save you. They will make sure that you are making crisp, correct approximations and that you are covering all your requirements without a sweater. When to Consider a Professional You can prepare your own taxes at home, but there are instances that you will need to summon a pro. A tax accountant provides you with expertise, saves you time, and potentially realises deductions or credits that will go unnoticed. Then when is it ideal to introduce one to the equation? If your company still rides shotgun to explosive growth and your tax issue is turning 'all technical, then that's darn tootin'. The same goes for being stuck by deductions or quarterly tax issues, being audited, or getting an IRS notice. Cutting up and making a huge play—like real estate investments or buildouts? Still the best. Aside from taxes, a decent accountant can balance your fiscal plan with company objectives. They can even arrange introductions to mortgage broker companies should you choose to finance a new site or growing operations. When choosing an accountant, select someone who has been familiar with businesses such as yours before. Get recommendations from businessmen or see reviews via the web. Just make sure that they are current with tax legislation as well. Assistance never calls you down for no charge at all—you'll still keep within budget. Think of your accountant as a member of your team who is there to help you navigate your tax issues. Conclusion Tax planning need not make you groan. Knowing your deductions, being fully booked, making quarterly tax plans, and selecting reasonable times to have someone come out to do this work can put you in command of your company's fund flow. Doing this will make tax time less stressful and enable you to keep extra profit. You aren't alone; many entrepreneurs face this, and there are many resources to help. Would you consider trying one of these ideas? I would appreciate it if you could share your ideas or thoughts by leaving a comment at the end of this article. Let's brainstorm with one another and conquer tax season together! Media Contact Company Name: Gmegan Contact Person: Joseph Wilson Email: Send Email Address:Suite 8, Shop 1/4 Benson Ave, Shellharbour City Centre City: Shellharbour State: NSW 2529 Country: Australia Website: Press Release Distributed by To view the original version on ABNewswire visit: Gmegan Launches Practical Tax Planning Guide Tailored for Small Business Owners
Yahoo
23-07-2025
- Business
- Yahoo
What is a merchant cash advance?
Key takeaways A merchant cash advance forwards cash against future sales. MCAs have aggressive repayments that disrupt profitability until it's repaid. Borrowing fees are high with rates of 50 percent to 100 percent or more. According to the 2024 Small Business Credit Survey, business loans and lines of credit are the most commonly sought types of financing by small business owners. For businesses with steady credit or debit card sales, understanding what a merchant cash advance is may reveal a faster, more flexible funding option. A merchant cash advance (MCA) provides a lump sum of capital in exchange for a percentage of future card-based sales, offering quick access to funds with fewer documentation and eligibility requirements than traditional loans. Merchant cash advance loans are also one of the most accessible financing options — 58 percent of applicants received at least partial funding, and 33 percent were fully funded. Although MCAs are easy to get, they are not legally classified as loans, making them exempt from state lending laws, which could mean significantly higher costs. How a merchant cash advance works A merchant cash advance loan forwards payment to your business against future credit or debit card sales. It's typically used to increase working capital for businesses and cover cash flow gaps. The advance works like this: Your business receives the cash. You and the financing company agree to the amount your business needs. The funds are dropped in your business bank account. The financing company charges fees. Instead of an interest rate, MCAs typically charge a factor rate that gets multiplied by the entire loan amount. For example, a $100,000 advance with a factor rate of 1.4 would cost a total of $140,000. Your business repays based on future sales. Repayments are often daily, though some MCAs offer weekly payments. The advance is repaid once you pay the borrowed amount plus the factor rate and any other fees. Lenders that do merchant cash advances Only some lenders offer merchant cash advances, so it's important to compare providers to find the most favorable terms. These lenders offer the best merchant cash advances available: Credibly Lendio PayPal SBG Funding Uncapped Pros and cons of MCAs Pros Approval rates as high as 91 percent High chance of approval for bad credit borrowers Funding within 48 hours Does not require collateral Cons Requires daily or weekly repayments Factor rate fees often cost more and have shorter repayment terms than conventional loans Doesn't help build credit No cap on interest rates, as MCAs are not subject to state usury laws How to refinance merchant cash advances Some MCAs allow you to refinance your cash advance if you need to extend the repayments. The trouble with refinancing is that most MCAs still require you to repay the total borrowing cost from the first advance. If you refinance, the new advance may calculate interest on the first advance's borrowed amount plus fees. You'll then be paying interest on interest, which can trap you in a cycle of debt until you repay the advance in full. How merchant cash advance repayment works Merchant cash advances come with two options for repayment terms: a percentage of your credit card sales or a fixed payment. Most MCAs also keep repayment periods short, typically 18 months or less, depending on the lender. Percentage of credit and debit card sales Most MCAs structure repayments as a percentage of your credit or debit card sales, also known as a holdback. Holdbacks range from 10 percent to 20 percent of sales revenue. Because you're paying a percentage, the exact amount paid to the financing company varies with each repayment. You can estimate your repayment term based on how much you make in sales. The terms may be drawn out if sales dip at any point. Calculating your repayment Let's look at the example of a $100,000 cash advance with a 1.4 factor rate. The total borrowing cost would come to $140,000 ($100,000 x 1.4 = $140,000). If you generate $50,000 in sales each week and pay 20 percent toward the advance, it would take your business 14 months to repay the advance. To calculate the repayment term: Calculate each repayment: $50,000 in weekly sales x .20 (20% holdback) = $10,000 repayment Figure out how long it will take to repay: $140,000 / $10,000 = 14 weeks Fixed withdrawals Some MCAs take fixed withdrawals directly from your business bank account each day or week, similar to a conventional business loan. The fixed amount is calculated from your estimated monthly sales, and you can figure out how long it will take to repay the advance plus borrowing fees. While the repayment term is predictable, you don't have the flexibility to extend it if revenue slows down. Merchant cash advance rates and fees You'll want to take note of the fees listed in the MCA agreement and ask questions if you don't understand the borrowing costs. Merchant cash advance loans subtract these fees upfront. If the MCA charges $1,000 in fees for a $5,000 advance, your business will receive $4,000 in funding. Typical financing fees for MCAs: Factor rates. MCAs may charge factor rates between 1.1 to 1.5, multiplying that rate by the amount you're borrowing. These are typically charged on business loans for riskier borrowers. Origination fee. This fee is charged as a percentage of the borrowed amount and is a common fee for other business loans as well. Underwriting or funding fee. This fee is charged for reviewing the financing application. It may get charged as a percentage of the borrowed amount or a flat fee, depending on the financing company. Administrative fee. This flat fee covers the cost of processing or maintaining the MCA agreement. Factor rate costs Because merchant cash advances charge a factor rate, the cost of borrowing is often higher than other types of business financing, such as a working capital loan. Take the $100,000 cash advance with a factor rate of 1.4 and a 14-month repayment term, for example. If you convert the factor rate into an interest rate, the annual interest rate for the $100,000 advance is 34 percent. By comparison, if you were able to take out a short-term loan for the same amount with a 34 percent APR for one year, you would have more time to pay off your loan. Monthly payments would also be smaller, and you'd pay less in borrowing costs overall. Use a business loan calculator to help you crunch the numbers and see how much more expensive factor rates can be. How to calculate the costs of a merchant cash advance Before taking out a merchant cash advance, it's important to calculate the costs to ensure it's the best fast funding option for your business needs. Let's continue with the example from above and calculate the total cost. When multiplying the $100,000 cash advance by the factor rate of 1.4, you get $140,000, meaning you'll pay $40,000 in fees. Your daily payback amount and time to repay the full amount will vary depending on your sales volume. Let's see how the figures differ for monthly card sales of $50,000, $75,000 and $100,000. $50,000 monthly sales volume $75,000 monthly sales volume $100,000 monthly sales volume Total MCA $140,000 $140,000 $140,000 Monthly payback amount $5,000 $7,500 $10,000 Daily payback amount (30-day month) $166.67 $250.00 $333.33 Effective APR 31.03% 46.54% 62.35% Time for full repayment 840 days or 28 months 560 days or ~18.5 months 421 days or 14 months In this example, a lower sales volume results in a lower payback amount and APR, but it takes longer to repay the debt. Taking your monthly sales volume into consideration and calculating your effective APR can make comparing MCAs to other financing options and their total costs easier. Bottom line Merchant cash advances can help when your business needs cash immediately to cover day-to-day expenses, and nearly any business with card sales can qualify even with bad credit. But its high fees and aggressive repayments may not be ideal for businesses with persistent cash flow problems. If you don't qualify for loans with traditional banks, consider business loans designed for bad credit borrowers, which may offer significantly lower interest rates than MCAs. Frequently asked questions What happens if you default on a merchant cash advance? Merchant cash advances can help businesses having difficulty finding funding, offering the capital needed to cover day-to-day expenses. But if you miss payments and default on the advance, the MCA company can sue you. If it wins in court, it can seize business assets to repay the advance. Can you write off a merchant cash advance? You can typically write off the interest portion of a business loan. While merchant cash advances aren't a loan, you may be able to write off its fees on your annual taxes. Like a business loan write-off, you can't use the advance to invest in business growth. What are some alternatives to merchant cash advances? MCAs can be a good fit for temporary cash flow gaps, but other alternatives may be a less costly solution with longer repayment terms. Here are some alternatives to explore: Term loans Business lines of credit Business credit cards Invoice factoring and financing Business grants What's the difference between a merchant cash advance and a bank loan? Both offer a lump sum of capital, but a merchant cash advance requires repayment based on a percentage of future sales, typically on a daily or weekly basis, which means payments can fluctuate with your card-based sales revenue. A traditional bank loan offers a fixed loan amount with regular installments and a set interest rate over a defined term. MCAs are usually faster and easier to obtain, requiring less documentation, but often come with significantly higher costs than bank loans. Are merchant cash advances illegal? No, merchant cash advances are legal in the United States, but they operate in a legal gray area. They are structured as future receivables purchases instead of loans, so they aren't subject to the same lending laws, including state usury limits. This loophole allows some lenders to charge extremely high fees, making MCAs a costly financing option for many small businesses. Can a merchant cash advance hurt your credit? A merchant cash advance may hurt your credit if it requires a personal guarantee or the lender reports missed payments or defaults to the credit bureaus. Even if not reported, defaulting could lead to collections or legal action, which can negatively affect your credit. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data


Forbes
22-07-2025
- Business
- Forbes
2 Profitable Side Hustles You Can Start This Week
There are two simple moves that could change the way you earn money, without quitting your job or ... More adding 30 hours to your week. What if I told you that two profitable side hustles could change the way you earn money forever? And that you wouldn't have to quit your job or add 30 hours to your week to do it? Sounds like a late-night infomercial, right? But this isn't a gimmick. It's real. And it's already working for thousands of entrepreneurs who want more income, more freedom, and more leverage. In this article, I'll show you the only two side hustles I have seen working for business owners who are already running a business and crave more financial breathing room now. This is for you if: Let's break it down. Why You Need Profitable Side Hustles Now (Even If You're Already a Business Owner) If you're already running a business, you might be thinking: "Isn't this enough?" Maybe. But here's what I see behind the scenes with a lot of small business owners: That's where the right side hustle comes in to create a new revenue stream. Done right, a side hustle isn't just extra cash, it's: If your current business is your main money engine, think of a side hustle as your second income stream, quietly humming in the background, adding lift and leverage. And here's more good news. Side hustles can eventually increase the value of your business. Why? Because a business buyer sees diversified revenue streams. They see scalable systems. They see repeatable income that doesn't rely on you as the business owner. The Two Profitable Side Hustles That Work For Freedompreneurs Forget drop shipping and scammy Multi Level Marketing. If you want a smart, low-lift, high-leverage side hustle that fits your life and your business goals, these are the only two I recommend: Why it works: You create it once. It sells forever. Digital products are the ultimate freedom hack. No inventory. No shipping. No time zone drama. Just pure profit on repeat. Best part? You already have the knowledge people will pay for. Think about it: You don't need to be a social media influencer. You don't need a huge email list of potential clients. You just need a clear solution to a real problem. Examples of Digital Products that sell: These small but powerful digital products can sell on autopilot via your website, Kajabi or a simple landing page with Stripe. You don't need fancy design. Just clarity and usefulness. Why it works: You're already recommending tools, books, and services. Now you get paid for it. Affiliate marketing isn't about spammy links or pushing things you don't believe in. It's about getting rewarded for the referrals you're already making. You probably: Those tools often have affiliate programs you can sign up for with just a few clicks. Real example: A copywriter I know sends her onboarding clients a list of tools they need for their product launch: an email system, a simple landing page, and a design tool. She includes her affiliate links. That one email brings in $400+ a month. Pro tip: Be transparent. Say "this is an affiliate link, I only recommend what I love", and people will respect you more, not less. What These 2 Profitable Side Hustles Have In Common Both of these income streams share something crucial: they turn you from someone selling their time to an asset builder. You and your team are not just doing the work. You're building a business that works for you, even when you are not. Digital products and affiliate marketing: And if you ever decide to sell your business? These extra revenue streams make it more attractive. Why? Because buyers love businesses that: Action Plan To Start Profitable Side Hustles This Week Step 1: Pick one side hustle: digital product or affiliate marketing. Step 2: Set aside 90 minutes this week to: Step 3: Launch imperfectly. Send the link to 10 people who need it. Post about it once. Mention it in your next client call. That's it. That's the launch. Final Thoughts: Building Leverage With a Side Hustle You don't need to wait for a business buyer to build a profitable, exit-ready business. And you don't need to wait until burnout to find freedom. You can build leverage now. You can create more cashflow today. And it can start with one small side hustle. That doesn't take over your life. That doesn't need a team. And that doesn't rely on hustle culture. Just one smart idea. Shared with the right people. And sold simply. That's how freedompreneurs build valuable businesses. Two profitable side hustles at a time. Now go pick yours.
Yahoo
19-07-2025
- Business
- Yahoo
Pros and cons of startup business loans
Key takeaways Applying for a business startup loan can help build credit and provide access to funds to cover working capital, inventory, equipment costs and more Startup loans can also come with tax advantages and protect the owners' personal assets from some risks, depending on the business type Startups may face difficulty securing traditional small business loans due to strict eligibility requirements Got a business idea you're itching to launch? A startup loan can get your business off the ground by funding your payroll, retail space lease, business equipment, inventory and otherwise. Getting a startup loan can also help boost the impact of whatever personal funds, grants and investments you put into launching your business. Unfortunately, startup business loans can be difficult to qualify for, since lenders see newer businesses as risky borrowers – especially if you have low income and little to no repayment history. Should I get a startup business loan? Taking on debt to launch your business idea is a decision only you can make. Taking on debt, of course, comes with risks, but you can make your loan work if you approach it the right way. A startup business loan might be right for you if: You have a good credit score and history. Lenders will be more eager to approve you and offer you better interest rates. You have a good revenue stream/projection statement. If you're upgrading a side hustle or know how much revenue you'll bring in, a loan can be more manageable. You have a solid idea of how to use the money. If you can demonstrate how the loan will be used to grow your business and revenue, lenders will be more likely to approve your application. You need the money quickly. Crowdfunding and applying for grants can take time, so a loan can get you financing faster. A startup loan doesn't have to be large to make an impact. Even taking on a smaller loan can help you get funding, build credit and establish a connection with your lender, which can lead to future lending opportunities. Compare pros and cons of startup business loans Pros Fast access to capital Can retain ownership Can help build credit Tax advantages Protect personal finances Cons Risk of default Strict eligibility requirements Can be costly May require a persona guarantee or loan Pros of startup business loans There are several main reasons you may want to look into startup business loans. Fast access to capital Startup business loans allow you to quickly get your business off the ground. Instead of having to save and invest your own money, or take the time to raise funds, a startup loan can get you financing almost immediately – especially if you have high upfront costs. For example, lump-sum options like business term loans or equipment financing are often used for high startup costs that your business needs to run, such as product development, office equipment, payroll or semi-truck financing. Bankrate insight Equipment loans are popular types of small business loans for startups. Since the equipment you are purchasing acts as collateral, small business owners don't have to worry about finding valuable assets to pledge as security for the loan. Retain business ownership Startup business loans can save you the trouble of finding investors and selling equity, which means giving up partial control of your business. Depending on how much equity you sell, you may need to answer to the demands of investors and make decisions that may not align with your business idea, or have to answer for low revenue. With a business loan, you keep full ownership and can run your business as you see fit. Build business and personal credit If you're only beginning to build out your personal or business credit score, making on-time payments on a startup loan can set you in the right direction. Lenders will check both your personal and business credit scores when you apply for a loan. The better your scores, the better a deal you'll get on your loan, with lower interest rates, higher limits and a better overall chance of approval. Getting your start with a startup loan can set you up for success when you want to borrow in the future. Certain types of startup loans are even designed to help new businesses build credit. Secured loans, for example, allow borrowers to take out a small loan in exchange for cash or collateral that the bank can seize if the loan defaults. So long as the borrower makes their payments on time, they can keep their collateral and build credit. Get tax advantages The interest you pay on a business loan is tax deductible, allowing you to save more on business taxes when you file. This isn't the case if you use personal funds, grants or crowdfunding platforms. Moreover, funds received from crowdfunding may be counted as business income depending on the nature of the campaign, which can push up how much taxes you pay. Funds received through loans, however, aren't considered income. Protect your personal funds If you take out a business loan as a limited liability company (LLC), you have a layer of protection between your funds and your business's potential failure. If you default on your loan, or if your business goes bankrupt, only your business's assets will be held liable for seizure and liquidation. Your debt may be discharged in bankruptcy, which means that taking on a loan can prevent you from putting your invested personal funds at risk if your business fails. Keep in mind that forming an LLC comes with certain pros and cons, and that it should be considered carefully as there are tax and legal ramifications to consider. In addition, lenders may require you to sign a personal guarantee or to put personal collateral on the line when you take out a business loan, putting your personal assets at risk and eliminating one of the key advantages of borrowing as an LLC. What is an LLC loan and how does it work? LLC loans can allow you to borrow while managing the risk to your personal finances. Here's what you should know. Learn more Cons of startup business loans There are also several cons to consider before looking into business loans for startups. Risk of default If your business doesn't produce the revenue you expect or turn a profit for a few years, you may not be able to make the business loan repayments. If you can't make repayments, you run the risk of defaulting on the loan. The lender can then seize any assets you used to secure the loan to repay, and your credit will take a significant hit. Bankrate insight According to the SBA Office of Advocacy, 67.9 percent of businesses made it past two years, and 49.2 percent survived five years from 1994 to 2021. If you're not confident that your business will be profitable right away, you may want to look into alternative funding options rather than a business loan. Strict eligibility requirements Startups may have a difficult time securing small business loans. A typical business loan requirement is a credit score of 600 or higher. Many lenders also prefer to see an established business that's been around for at least two years and has annual revenues ranging from $100,000 to $250,000 or more. These requirements can be difficult for startups to attain. According to the Federal Reserve Banks' 2025 Firms in Focus: Chartbook on Firms by Revenue Size, 52 percent of businesses under two years old have annual revenue of $100,000 or less, with 55 percent operating at a loss. It's possible to find more lenient lenders. For example, some are willing to offer secured business loans to startups, while others may accept credit scores less than 600. But your options may be limited, and you may pay more in interest than an established business with higher credit and revenue. Bankrate insight Startup business loans with no revenue requirements are hard to find. Many lenders require at least six months of operation and annual revenue requirements of $100,000 or higher. But you may be able to get approved for a startup business loan if you have several years of related field experience and enough revenue in a business checking account that shows you can cover a percentage of the total loan cost. Costs Business loan fees and interest rates can also be an extra burden on startups. The best interest rates are reserved for established business owners with good-to-excellent personal or business credit. Riskier borrowers often get charged more interest, sometimes in the range of 30 to 60 percent. You may also have to watch out for fees, which vary by lender and type of startup loan. For instance, origination fees can either be a flat fee or can be a percentage — typically anywhere from 0.5 percent to 8.00 percent. You may also have to deal with late payment fees, underwriting fees or even maintenance fees. These costs can add up, and you'll need the capital and a plan to pay for these costs when getting a business loan. Personal guarantee or lien requirements To get a business loan, you typically have to sign a personal guarantee. This legal document states you are personally responsible for the company's debt if you default on the loan. The lender may take you to court to recoup losses if you can't repay the loan. If you take out a secured business loan, you will have to provide some form of collateral, which is an asset that you put up to secure the loan and reduce the lender's risk. The lender will place a lien on the asset, which is a legal claim giving the lender the right to seize the asset if you default on the loan. For instance, if you took out an equipment loan for a semi truck, used the truck as collateral, and defaulted on the loan, the lender could then take the truck. Defaulting on a loan and losing your personal or business assets is a risk many business owners take. To be sure it's right for you, you'll have to make sure you can manage your small business loan well to avoid going into default. Bankrate insight Many startups avoid using personal assets to guarantee a loan by funding the business with personal savings instead. According to the 2025 Firms in Focus: Chartbook on Firms by Age of Business, 70 percent of businesses under two years old used the owner's personal savings to weather a financial challenge, while 43 percent received funding they would have to repay. Bottom line Startup business loans are an option for getting upfront cash to get your business up and running. They may also help build credit, which can lead to more affordable loans down the road, and are tax-advantaged over other forms of funding. Make sure to consider all your options before applying, as there are risks to consider, including the risk of default if you can't make the payments as well as high rates and fees. Frequently asked questions Is it a good idea to get a loan to start a business?While getting a business loan for a startup is risky, many startups need a loan to get off the ground. You may choose to take out a business loan if you have a solid business plan and a product or service that's highly marketable to your target customers. But if you're new to the market or don't have data to back up whether your business will succeed, you may want to start the business first and get a business loan later to help you grow. Who offers loans to startup businesses?Small business startup loans are offered by banks, credit unions and online lenders. While online lenders tend to be more accessible to startups, it's worth looking at traditional options like banks and credit unions to see if they're willing to work with you, as they tend to offer more favorable rates and terms. Is it difficult to get a startup business loan?It can be difficult to secure a business startup loan if you are going through a traditional bank, which tends to work more with established businesses that have been around for two years or longer. Online lenders are often less stringent, and some specialize in working with startups but may charge high rates and fees. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Finextra
14-07-2025
- Business
- Finextra
Behind the Vault: How Custodial Infrastructure Powers Crypto and Stablecoin Payments: By Milko Filipov
As cryptocurrency and stablecoin payments continue to gain popularity in the world of digital transactions, many businesses are beginning to explore the potential benefits of accepting cryptocurrency payments. However, while the advantages of integrating cryptocurrencies into business models are well-understood by most small business owners and treasury departments in larger enterprises, there remains a key area of uncertainty: how to manage and secure the cryptocurrency once it is received. This aspect of cryptocurrency payments is referred to as custodial infrastructure, which addresses the safekeeping and management of crypto assets. Since stablecoins are crypto tokens that operate on blockchain networks, their custody follows the same fundamental principles as other cryptocurrencies. What is Custody in the Cryptocurrency Industry? In traditional finance, custody refers to the services provided by institutions, such as banks, that manage and safeguard assets like cash or securities. In the cryptocurrency world, custody similarly refers to the various methods used to protect and secure digital assets. Since cryptocurrencies exist on decentralized and distributed blockchain networks, custody in this context focuses on securing the private keys that grant access to these assets. Let's explore the different types of crypto custody and how each impacts the transaction cycle. Self-Managed Custody: Full Control but High Responsibility The first type of crypto custody is self-managed custody, where the business takes direct control over the storage, security, and management of its cryptocurrency assets. In this arrangement, the merchant owns the cryptocurrency and has the ability to exchange or trade it at will. Managing self-custody involves the creation and secure storage of private keys and wallets, requiring the business to handle the entire security process independently. A major advantage of self-managed custody is the autonomy it provides. The business retains full control over its assets, offering flexibility and the opportunity to implement its own security protocols. Additionally, self-managed custody eliminates the need for third-party custodians, potentially saving on custodial fees. This model also aligns with the core principles of decentralization that underlie the philosophy of cryptocurrencies, which is especially appealing for businesses that prioritize transparency and independence. However, the responsibility of managing the assets also comes with challenges. The technical complexity of safeguarding private keys and wallets requires specialized knowledge and expertise. If not properly secured, assets are at risk of theft or loss. There is also no recourse for recovering lost keys, which can result in irreversible access loss to the crypto assets. Businesses must also be mindful of varying cryptocurrency regulations across jurisdictions, which may add an extra layer of complexity to self-managed custody. Third-Party Custody: Professional Security with Trade-Offs The second type of custody is third-party custody, where businesses entrust their cryptocurrency assets to an independent, qualified custodian. These custodians specialize in the secure management of digital assets, providing enhanced security and professional management for their clients. Third-party custodians can include centralized cryptocurrency platforms or specialized custodial banks, which may be regulated in certain jurisdictions. One of the most significant advantages of third-party custody is advanced security. Custodians are dedicated to safeguarding their clients' assets and employ cutting-edge security measures such as multi-signature wallets, cold storage, and encryption. Many custodians also offer insurance to protect clients from theft or hacking incidents, further enhancing the protection of digital assets. Third-party custody also provides convenience. By outsourcing the responsibility of managing crypto assets, businesses can focus on their core operations without the burden of managing security measures. Additionally, many custodians offer a range of additional services, including trading, staking, and lending, which could further benefit businesses looking for more comprehensive financial solutions. However, third-party custody comes with its own set of challenges. The most obvious disadvantage is the cost of the service. Third-party custodians charge fees for their services, which can add up, particularly for businesses with smaller cryptocurrency holdings. Furthermore, businesses relying on a third party also face counterparty risk: if the custodian is compromised or fails, there is a risk of losing the assets. This loss of control is another downside, as businesses may experience delays or restrictions on withdrawing their assets, especially during market volatility. Lastly, the reliance on a few major custodians creates centralization risks, where a breach in the security of one custodian can affect many clients in the cryptocurrency ecosystem. Hybrid Custody: A Balanced Approach For businesses that find themselves torn between the benefits and drawbacks of self-managed and third-party custody, hybrid custody offers a balanced approach. Hybrid custody divides control over the assets between the business and a service provider, often through technologies like multisignature wallets and secure multiparty computation (SMPC). Multisignature technology allows multiple parties to control a cryptocurrency wallet. For example, a wallet may require at least two out of three private keys to approve a transaction. This approach reduces the risk of a single point of failure, as no single entity has full control over the assets. Hybrid multisig custody solutions are often used by centralized platforms or businesses with multiple stakeholders. Alternatively, secure multiparty computation operates entirely off-chain and enables multiple parties to securely contribute to the signing of a transaction without revealing their private inputs. This method enhances privacy and security by preventing any party from gaining knowledge of the others' contributions. Hybrid custody solutions combine the benefits of both self-managed and third-party custodians, ensuring robust security while retaining a degree of control over the assets. What's Next: Major Payment Providers Drive Innovation in Stablecoin Custody The custodial landscape is also being reshaped by increased involvement from major financial and payment companies, signaling growing confidence in the stablecoin and crypto ecosystem. Industry leaders like Stripe, Visa, and Mastercard have recently made strategic acquisitions and formed partnerships with companies focused on stablecoin infrastructure. Stripe acquired Bridge, a startup specializing in stablecoin orchestration, while Visa partnered with the same company and BVNK to explore stablecoin-based settlement and card issuance. Mastercard has also entered the space by collaborating with MoonPay, following MoonPay's acquisition of stablecoin-focused infrastructure firm Iron. These moves are expected to introduce new custody models and integrated solutions, offering businesses more seamless and secure ways to manage digital assets within familiar financial platforms. Conclusion: Choosing the Right Custody Solution The decision to choose self-managed, third-party, or hybrid custody largely depends on a business's resources, expertise, and risk tolerance. While self-managed custody offers control and potential savings, it also demands a high level of technical expertise and carries the risk of loss or theft. Third-party custody provides professional security and convenience but comes with fees and counterparty risks. Hybrid custody offers a middle ground, combining some of the advantages of both approaches while mitigating certain risks. If you are a business still unsure about the most suitable custody solution or how to implement and manage it, a quick and effective way to gain the necessary knowledge is by enrolling in the eLearning course Cryptocurrency Payments for Businesses from reMonetary. This course offers an end-to-end perspective, covering topics such as the benefits of cryptocurrencies and stablecoins, the conversion process and settlement options, the role of exchanges, a comprehensive overview of the transaction cycle, and the business model and cost structure of a crypto PSP. By the end, you'll have a solid understanding of the crypto PSP landscape, enabling you to make informed, strategic decisions for your organization. For businesses with more complex use cases or those seeking personalized guidance from a leading consulting firm in the digital transformation space, please feel free to contact me. In the next article, we will explore another important aspect of cryptocurrency acceptance: the various settlement options available to businesses integrating cryptocurrency payments into their operations.