Blog/News

Handling SBA Loan Lags

Sadie Keljikian, Express Trade Capital

The current government shutdown is the subject of nation-wide distress for myriad reasons. Sources are reporting that the shutdown, which is officially the longest in US history, has delayed public services like tax refunds, food, beverage and aviation product safety inspections, and millions of dollars in Small Business Association loans.

Generally, the SBA handles approximately $200 million in loans daily, but since the shutdown began, they’ve been unable to provide any financing aside from disaster assistance. As a result, hundreds of small businesses nationwide have waited a month for vital funds to help them grow and operate.

While many of the delayed loans are relatively small amounts, nearly 40% of them are known as 504 loans. These are meant to help business owners purchase real estate or costly equipment and can amount to $20 million or more. Regardless of quantity, many small business owners who rely on these loans are wondering how to bridge the gap until SBA loans are readily available again. The answer depends on where each business falls in the wide variety of industries the SBA serves.

Substituting these loans directly is tricky. If you or your business have very good credit, you may be able to replace your SBA loan with a regular bank loan, but it will likely take at least 60 days to reach you, which is decidedly unhelpful when speed is a priority.

We’ve discussed creative financing methods before, but not in terms of which methods are fastest. Depending on your budget, there are a few options that will give you access to quick funding for your business:

  • Factoring your receivables.

If you’re selling goods to creditworthy retailers, you can receive financing against your unpaid invoices. Provided you have all necessary materials and enough volume to qualify, you may receive funds within a day or two with this method.

  • Finance your purchase orders.

Purchase order financing (or PO financing) is a method designed precisely for wholesalers who need help covering production and shipping costs while they wait for their customers to pay. So, if you have purchase orders from creditworthy customers and need to bolster your business’s funds, PO financing is a great option.

  • Borrow against your unsold inventory.

If you have a stockpile of unsold inventory and a solid track record of consistent sales, you can borrow against your unsold inventory. This can take slightly longer than financing against your receivables or purchase orders since it requires a field examination (as do any lending arrangements involving goods, equipment, or real estate), but can be a highly useful tool if you find yourself in a slow season.

  • Enter a merchant cash advance agreement.

If your customers pay you with credit or debit cards regularly, you may want to consider merchant cash advance options. Merchant cash advance arrangements, or MCAs, aren’t technically considered loans, but operate in a very similar way. At the onset, you receive a lump sum in exchange for a percentage of your future credit/debit card sales. With an MCA, you will receive funds very quickly, but it is important to note that this is by far the most expensive option, as interest tends to run extremely high among MCAs and compounds over time.

There are numerous ways to handle an unexpected lag in your business’s operational funds, but be careful not to let an urgent situation lead you to poor lending choices that could hurt you down the road.

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Tackling Common Problems, Part 2

Sadie Keljikian, Express Trade Capital

There are numerous difficulties associated with starting a new business. Establishing sustainable practices that leave room for growth is complex, but crucial to building a successful company and brand. We’ve already talked a bit about smoothing out cashflow and creating a sensible production process, but now let’s talk about some of the vaguer aspects of building a business:

  • Problem: you’re in the early stages of building your business and while you know what products you want to design and sell, you aren’t sure how to establish a brand for your business. How can you differentiate yourself from your competitors and create your own space in the market?

Establishing a brand is one of the most complex and crucial steps to building a successful business. Without a clear voice and intention, you are likely to get lost in a sea of businesses that sell similar products. The first step is to identify your niche: who is most likely to buy your products? Do your products appeal to an underrepresented demographic, or will you have to work hard to stand out among a large, commercially popular group?

Once you’ve figured out who your target audience is, you can start thinking about ways to more effectively appeal to that demographic. You may want to think about what else is popular or important among the people who buy your products and take a multi-pronged approach. There are a few ways to approach this depending on your priorities and preferences.

Most businesses have an overarching goal or company philosophy that guides their practices. Some businesses even take a stance on sociopolitical issues, as Uber, Lyft, and several others famously did after the 2016 election. While this isn’t necessarily a bad idea, it’s important to consider the fact that you may lose as many customers as you gain in doing so, depending on the issue and stance you choose. Some less divisive tactics include supporting a charitable cause and advertising your involvement or arranging a licensing agreement with a public figure (social media influencer, celebrity, etc.) who is relevant to your target demographic.

Another potential way to build your brand is to partner with a company in a similar field. Associating your business with an already trusted brand is a great way to establish yourself as a legitimate competitor and begin to form valuable relationships across your industry.

  • Problem: you recently decided to start hiring a team and expanding your business, but you’re not sure where to look or how best to choose new employees, especially since you can only hire a small number of people within your current operational budget. How can you ensure that you’re building your business in the most efficient and practical way?

We’ve talked about the complexities of hiring a new team within a limited budget before, but the key factors to consider are universal. Before hiring anyone, identify your business’s needs and do some research to determine the most efficient solutions. There are almost certainly businesses just like yours who’ve already figured out the best approach through trial and error, so looking into their methods will often save you the trouble of learning the hard way.

Once you know what you need, boil it down to the essentials and act as quickly as you can without rushing the decision-making process. The benefits of hiring the right people dramatically outweigh the cost of additional salaries, especially when your existing team is massively overloaded with work. As long as you vet your potential employees carefully and hire the best people you can, you’ll have a solid foundation for your team as it continues to grow.

  • You’ve got a great team and your business is growing more quickly and dramatically all the time. You’re excited, but you start to realize what Peter Parker learned from his uncle: “with great power comes great responsibility.” Having a growing and thriving business is the goal, but before your business reaches its potential, you need to consider things like healthcare and human resources if you want to keep your employees happy. You value the employees you have and want to do right by them, but how do you start?

Employee resources and benefits are crucial to a growing business, but the vast array of options and variables can be difficult to sort out without prior experience. Obviously, you should work out your budget and do your research, but if you plan to secure health insurance first, it is wise to hire a trustworthy insurance broker. The broker will be able to walk you through the options available within your budget and explain any complicated jargon that may confuse you.

If you decide to establish your human resources department first, however, you may find that you’ll be better equipped to approach employee benefits without needing a broker. Many small businesses start out without a human resources department, leaving employment issues to the owner or individual department heads. This can work for a while, but as the business grows, those responsibilities can quickly become overwhelming, especially for those who aren’t HR professionals. Hiring an HR professional will free up other employees to take better care of their regular responsibilities, plus your HR person will be qualified to ensure that your business is operating within legal parameters and isn’t risking a lawsuit.

In both cases, guidance from an experienced professional is a massive advantage, especially since a wrong move could cost your company dearly.

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Tackling Common Problems, Part 1

Sadie Keljikian, Express Trade Capital

Running a wholesale business is financially and logistically complex. There’s a lot to monitor and numerous variables can force you, the business owner, to think and act quickly to effectively manage unforeseen difficulties. Fortunately, most of these difficulties fall into a few categories of common problems that come up for small to mid-sized businesses.

Since these issues are common, solutions are readily available, though perhaps not obvious to less experienced business owners. Addressing them is just a matter of having enough experience to know how best to do it. Here are a few examples of common hiccups for which new businesses might not be prepared and what to do if they come up:

  • Problem: you’re a clothing designer and you decide to start producing and selling your designs independently. You have your designs and samples ready, you’ve sold some pieces direct to customers online, and you’ve even had promising discussions with local boutiques that would like to sell your pieces. There’s just one problem: you’re running this business by yourself and there’s no way you can produce the quantities the boutiques want in the given time frame. How can you get your business off the ground and establish a sustainable production structure?

Designers and inventors consistently run into the same problem: how can I produce the required amount of my product by the time my customer needs it without overextending my resources? There are a few ways to handle this. One is to simply turn down orders you can’t reasonably fulfill using your current production processes, but that means you’d miss out on opportunities for growth.

Another approach is to hire a team to manufacture your products on-site. This is an expensive option since it involves hiring new employees and acquiring new equipment, but it allows you to control product quality and directly and provides a foundation for increased output. As long as the business doesn’t grow more quickly than your overhead can accommodate, manufacturing on-site is a perfectly viable option.

Alternately, many designers and inventors choose to outsource their manufacturing processes, which removes the need for additional employees and specialized facilities. Some creators aren’t comfortable handing their designs over entirely, usually because they worry that their design will be plagiarized or that product quality will suffer. While quality and security concerns are valid, sufficient research and vetting will indicate whether a production facility is trustworthy. As long as you do your homework, outsourcing is an effective and efficient way to increase production.

  • Problem: a buyer at a big-box retailer contacts you to place a huge order. Your production line is ready, but you soon realize that the cost of fulfilling such a big order will leave your operational funds severely depleted. You don’t want to pass up the opportunity to gain bigger customers and expand your business, so how can you fulfill the order without dipping into funds you need to run your business?

Many flourishing wholesalers lose traction because they pass on big orders from influential retailers out of fear that they’ll lose equity or acquire unmanageable debt. What a lot of new business owners don’t realize is that there are ways to supplement business-related costs that don’t involve expensive traditional-style loans.

One way to approach the issue is to apply for a line of credit with a bank or private financial institution. Just like a credit card, a line of credit allows you to defer expenses that might be prohibitive. As long as you and/or your business is creditworthy and you are able to pay on time, there is very little downside to securing a line of credit on behalf of your business.

Another option is to use alternative lending (or “alt lending”). Alt lending is a growing and thriving field in which lenders use creative financing methods, meaning that you don’t necessarily need perfect credit to receive funding. Private financial institutions who offer alt lending solutions can offer funding against purchase orders, invoices, equipment, and even unsold inventory. Most importantly, this method allows you to borrow small amounts as needed, rather than borrowing a lump sum and worrying that you’ll accrue excessive interest.


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Acquisitions: a Blessing or a Curse?

Sadie Keljikian, Express Trade Capital

Big brands, particularly food brands, have been merging with and acquiring smaller brands for decades. In recent years, food and drink executives have continued to strategically acquire small brands, but struggle to boost productivity among those acquisitions without damaging or cancelling out any of the fundamental qualities that made the small brands worth buying.

This struggle to maintain the appeal of a small brand while operating under a massive international conglomerate like Coca Cola or Hershey has become increasingly challenging as consumer priorities evolve. When a big brand acquires a smaller one, consumers tend to be concerned, at least initially, about the product remaining consistent. Over time, however, other issues often arise. A strong company culture and drive to innovate, both of which are often crucial to a small brand’s success, can get lost when a big brand takes over.

A prime example is the trajectory of natural food brand Kashi since it was acquired by Kellogg Co. in 2000. Prior to the acquisition, Kashi was one of the first brands to usher in the now-lucrative and popular industry of healthy foods made from simple, ethically sourced ingredients. Though the partnership worked for a while, Kellogg’s impulse to control Kashi’s internal operations eventually took hold, which hindered Kashi’s ability to constantly innovate and improve its products. Before the acquisition, teams of three or four people made decisions about everything from suppliers to pricing to new product development. In an attempt to take more decisive control, Kellogg’s convoluted Kashi’s processes, slowing down their decision-making capability and complicating attempts to change or grow.

To be clear, no one is saying that big brands shouldn’t acquire smaller ones. There is immense potential value in giving young, fresh businesses the resources that big brands have. However, when acquiring a young company that’s found a niche and an audience, one should be aware of what makes the small brand appealing to consumers and make every effort to maintain and support those qualities, while still facilitating increased production and global reach.

Some of Walmart’s recent acquisitions, notably Bonobos, are perfect examples of this. When Walmart initially acquired Bonobos, there was considerable public backlash. Fans of the online men’s wear brand were concerned that quality would plummet in favor of lower prices when Walmart took over. Walmart wisely remained “hands-off”, allowing Bonobos to uphold its central values as a company: high quality, a good fit, and inclusive sizing. As a result, Walmart indicates that its online sales have increased substantially since it acquired Bonobos among other ecommerce brands last year.

Needless to say, it’s a tough balance to strike, but since changing a formula that works for a small brand is a bad idea, it’s obviously important for big brands to rigorously research whatever businesses they plan to acquire. It’s also important to keep key team members from the smaller business involved and give them input on how the business moves forward after the acquisition, rather than commandeer operations entirely. Simply creating an open line of communication can do wonders to not only maintain the acquired brand’s growth and success, but also to establish a positive working relationship between new management and the people who made the business successful in the first place.


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Bridging the Wage Gap

Sadie Keljikian, Express Trade Capital

For many years, the gender wage gap has been the topic of numerous discussions, articles and debates. Despite increasing attention on the subject, most business owners genuinely believe that they pay all of their employees fairly and based on merit. Counterintuitive as it may be, the most confident CEOs are often the worst offenders.

A number of factors like career choices and discriminatory family leave laws contribute to the wage gap, but research indicates that these contributors don’t make enough difference to account for the disparity. Unfortunately, the biggest contributors tend to be a combination of archaic gender roles and double standards with regard to negotiation and self-promotion. On average in the US, women earn 79.6% of the salary a man earns in the same full-time, year-round employment conditions. Although the gap has certainly decreased over the years, we’ve got a long way to go, particularly among small and mid-sized businesses, before achieving equity.

Interestingly, companies that genuinely believe that they pay their employees fairly and based on merit often contribute most to the wage gap. For example, 91% of Midwestern employers claim that they pay their employees fairly, but the region has the widest discrepancy in the country, with female employees making an average of 43% less than their male peers. There are several reasons for the dramatic difference between perception and reality, but it primarily boils down to subjectivity of performance reviews and raises combined with (perhaps unintentional) discrimination. These issues are particularly prevalent at small companies where roles and responsibilities can be somewhat vague, complicating the potential for equal compensation. Another common road block on the path to equity is the fact that male employees are statistically far more likely to negotiate a starting salary or a raise than their female colleagues. In fact, even when women do attempt to negotiate, they are often seen as pushy or demanding, where their male colleagues are seen as decisive and empowered for doing the same thing.

Knowing all this, you may be wondering: what can I do to ensure that I’m paying my employees fairly? There are several ways to combat the factors that may lead you to unintentionally contribute to the wage gap. Start by researching anti-discrimination laws on the federal and state level to ensure that you are compliant. Then, simply look at the numbers and see if there is a disparity between the salaries of your male employees and those of your female employees at the same level. If you find that there is, consider why. It may be wise to standardize starting salaries, raises and/or bonuses based on position or level rather than allowing employees to negotiate them.

If, however, you find that your male employees are mostly or all in higher-paid positions than your female employees, you may want to reconsider your criteria for those positions and whether it offers an advantage to men over women. Take this opportunity to evaluate advancement opportunities across your company. If men are at a consistent advantage, give your female employees the opportunity to prove their worth and compete with their male colleagues on a level playing field.

Whether or not you unintentionally offer greater advantages to some employees than others, it is always worth evaluating the contributors that lead to promotions and raises on a company-wide scale. You may notice a discrepancy between competence and compensation and at the end of the day, delegating responsibility to your best people is always wise.


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Building a Workforce

Sadie Keljikian, Express Trade Capital

You’ve done all the grunt work and you’re finally ready to hire people and get your business up and running. But how are you going to distribute your workforce appropriately without any prior experience to determine where employees are needed most? Here are a few tips to help you efficiently staff your business and get started on the right foot:

  • Identify your business’s needs.

Before you can decide how many people to hire, you need to figure out exactly what your business needs. This may involve some trial and error, but try starting off with the skills you know you’ll need. In a wholesale business, your needs will depend on how much of the process you handle personally. If your goods are manufactured on site, you’ll obviously need to hire people to fabricate your goods and assure that they are up to your quality standards. If you plan to outsource your manufacturing, you can focus instead on hiring competent back office support.

  • Do some research.

If you have no idea where to begin, research similar businesses and find out how they started. Better yet, seek out entrepreneurs in a similar field and ask them who they hired first and how they managed their staff back when they were starting out. It can be difficult to prioritize positions without context, so don’t be afraid to inquire about someone else’s experience and use that information to your advantage.

  • Act as quickly as possible.

Hiring new people at a budding business is daunting, but just one or two more people on your team can have a remarkable effect on your productivity. Obviously, your hiring capacity will be limited for financial reasons, but usually the profit-boost that comes with bringing in new people will more than offset the cost of their salaries.

  • When in doubt, go lean.

If you’re still not sure how to arrange your employees, boil your needs down to the basics and go from there. If you can hire a small number of competent people, you’ll have a great foundation on which to build your company as it grows. It’s always better to have a small group of capable professionals and supplement as needed than to hire a large group of new employees who need more guidance than you have the time or resources to provide.

  • Consider Potential.

Regardless of the initial size of your team, it is wise to consider a prospective employee’s potential as well as their previous experience. Most employees respond well to challenges, so while you should manage your expectations, you’d be surprised how much the average employee can accomplish with a bit of a challenge and the right support.

  • Create a team-driven culture.

In any employment situation, it is crucial to establish a workplace culture that rewards teamwork and collaboration. Since an employee’s potential is generally well beyond the responsibilities required of them at the onset, invite them to get as involved as they are willing and able to be. In any workplace, but particularly a new one, it is important to encourage and allow employees to take ownership of their work and the business as a whole. This dynamic will not only get employees more invested in their work, it will build a stronger foundation for your business as a whole.


At the end of the day, there will be a learning curve involved in the process, but if you hire carefully and conservatively at the beginning, chances are you’ll learn a lot about how to manage your hiring process as your business grows.

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