How to Handle Late Payments Without Losing Customers

Whether you’re a young, aspiring entrepreneur or a successful leader in academia, you depend on your customers and clients to pay on time, every time, and you need straightforward policies and processes to make that happen. If your customers are late with their payments, your business has to handle the situation with kid gloves because the last thing you want to do is lose a customer. Here are some tips for how to tackle late payments without offending your clients.

By Julie Morris, Guest Contributor and Author

Attempt to Avoid Late Payments in the First Place

In a dream world, your customers will always pay on time and you’ll never have an issue, but that is not reality. However, you can get as close to that as possible by creating a clear and concise payment policy and placing it on your website and your invoices. Yonyx points out that this policy should list all acceptable payment methods and spell out your terms, such as when a payment will be considered late and penalties if a late payment does occur.

Your payment policy should also be clearly stated in all documents that your client or customers receive when they first start working with your company. If the amount of money in question is significant, you may want to work with an attorney to write up a contract. Be sure to work with the business partner during this process so that the document is fair to both parties.

The point is that you want something to point to if a customer is late with the hope that they will understand their obligation and complete the payment ASAP. When customers or clients are late with payments, make sure you’ve sent the invoice to the right person, coordinate your invoicing with the customer’s billing cycles, and/or offer a discount for quick payment. You can also spruce up your invoices to make them more memorable by using a free invoice generator to create a branded invoice that leaves a more professional impression.

It is also a smart idea to invest in payroll software that can properly process and organize payments so you know which clients have paid and which have not. The last thing you want to do is accuse a customer of being late when you actually have received their payment and it slipped through the cracks.

Another way to ensure timely payments is to make it easier for your clients and customers to pay you. When you accept payments through your app, you’ll simplify the payment process, but you need to ensure that your customers’ sensitive financial information is protected. Fortunately, you can use a tool to authenticate bank account information for secure payments.

Polite Follow-Ups

Once you realize that a payment is late, it is time to send a follow-up, but remember you do not want to be overly demanding or threaten litigation at this point. Start by sending an email that reminds the customer of the item you sold or service you completed and the cost for that work, and remind them that they have a past due payment.

If you do not get a response, this may be a good time to call the client’s company and inquire with a different employee about how to be paid. In some cases, the person who requested the service is not the same individual that handles invoices, so ask for the billing department just in case.

If a phone call is required for the follow-up, Practice Ignition suggests keeping it nice and polite. Phrases like “this is a friendly reminder” and “I’d appreciate it if…” are a good way to start. If the customer states that they don’t have the funds to pay the bill in full, you might consider allowing a partial payment or creating an alternative arrangement that fits both of your needs.

Make the Payment Process Easier

Organizations that are finding that they have payments arriving late on a constant basis may want to look at their payment processes and make them simpler to use for the customers. Give your clients multiple avenues to make their payments, be it over the phone, through a web portal, or by mail.

You may also consider sending out automated reminders to your customers. These can be sent out a few days prior to a due date, on that day, and a week after the due date if payment is not made. By receiving automated messages that are sent by a computer, your customers will know that this isn’t a personal attack. Another benefit of setting automated reminders is that you will never forget to ask for a payment, and sometimes, that can be half of the battle.

If you are looking to keep your organization running on full steam, get the payments you’ve earned through the tips above.

About Julie Morris

Julie Morris is a life and career coach. She thrives on helping others live their best lives. It’s easy for her to relate to clients who feel run over by life because she’s been there. After years in a successful (but unfulfilling) career in finance, Julie busted out of the corner office that had become her prison.

Today, she is fulfilled by helping busy professionals like her past self get the clarity they need in order to live inspired lives that fill more than just their bank accounts. When Julie isn’t working with clients, she enjoys writing and is currently working on her first book. She also loves spending time outdoors and getting lost in a good book.

Read her articles here

Improve your company’s performance and decision making with services from BRP Onesta. Find out how our customized solutions can help your business!

The Complete Guide to Business Credit: What is Business Credit?

One of the questions we are asked frequently is what is business credit? This article explores the main concept of business credit and some of the benefits of establishing and building business credit. We also provide some of the barriers that small businesses encounter when establishing and building business credit and some things that small business owners should expect.

By Thomas Tramaglini, Managing Director at BRP Onesta
info@BRPOnesta.com
www.backofficedepot.com
www.thomastramaglini.com
About Thomas Tramaglini

Business Credit: What is it?

Nearly every successful business has established business credit. When the business wants to grow or expand they do not need the personal funds of the business owner(s) to fund their projects.

When a business is able to use their established business credit, the business has demonstrated to creditors that they have an ability to perform on paying its financial obligations according to the terms of its contracts from their creditors. That is, business credit is how well the business takes on debt and pays its bills over time.

How is business credit different than personal credit?

Business credit is the establishment, building, and maintaining of a successful borrowing and payment of credit on goods and services. Business credit is established under the business’ Employee Identification Number (EIN) and is not associated with the business owner’s social security number.

Personal creditors like loan companies and credit card companies report your payments to the three consumer credit bureaus (Transunion, Experian, and Equifax). Business creditors do not report your borrowing and payment history to your personal credit. Instead, borrowing and payment history is reported to business credit bureaus (Dun & Bradstreet, Experian, Equifax, Creditsafe). The business credit bureaus score history and provide an estimate of the business’s risk, or ability to repay a loan or other financial obligations, similar to personal credit.

On average, small business owners have 50+ lower FICO scores.

The advisors at BRP Onesta work with a large cross-section of small business owners to provide a host of back-office solutions and offer an affordable, world-class commercial lending platform.

With the need for small business loans and other financial solutions, on average our clients’ personal credit scores (FICO) are 50+ points lower than the Equifax average score of 698 that was reported in 2021.

Therefore, it is in every small business owner’s best interest to establish and build their business credit as a major advantage is that they can separate their business finances from their personal wealth, ultimately protecting themselves.

Other advantages of business credit

  • Most ability to borrow is double for what it would be on your personal credit.
  • Perfect for startups.
  • Easy and fast to establish credit.
  • Building business credit makes.
  • You do not have to have outstanding personal credit to build and use business credit.
  • Most business credit financing does not require financials for approval.
  • Your business will become much more valuable.
  • No collateral required.
  • Usually, no financials or business bank statements needed for applying (No Cash Flow Requirements).

Does your business have any business credit?

Many times, business owners tell our advisors that they have a lot of business credit. For instance, we are told that the business owner has a business credit card, or they have their car in their business’s name.

Having a business credit card or a car in your name does not mean you have business credit. If you do not know, NAV has a great free tool to gauge what you have on Experian, Equifax and Dun and Bradstreet Business Credit Scores.

Business Credit Programs Work

One of the most valuable investments that a business owner can make is by establishing their business credit. Establishing business credit is not hard, however there is a lot that goes into building one’s business credit such as understanding the process and applying for the right tradeline at the right time.

There are several different business credit programs our there and business owners should examine those programs before they get into any process. For instance, the program we provide allows small business owners to take a test drive before they spend one cent on programming. Some companies will charge you up front thousands of dollars and have a time limit for their work with you. Many times, the time it takes to establish and build business credit surpasses the time the company gives you, unleashing hidden costs. Programs like BRP Onesta’s do not have time limits.

Do It Yourself Usually Not Successful

Many different companies will provide business credit programs that are mostly do it yourself. That is, the majority of the work for Business Credit tends to be placed on the business owner. When that happens, we estimate about 85% of our clients (who have done our DIY model) never actually can attain any business credit past the basic business credit where anyone can get what is offered (Uline, Grainger). Not that those tradelines that are basic are good, they will not provide your business cash and certainly when more advanced business credit needs are required, the small business owner will be declined.

Biggest Barriers for Building Business Credit

We have been working with small business owners to build business credit for many years. We know that small business owners struggle with the following aspects of building business credit before they try to establish their tradelines:

  • Unsure of what goes into business credit approvals.
  • When business owners assume that they already have plenty of business credit.
  • Lack of understanding of what business credit is.
  • Fail to have established what creditors suggest are indicators of business creditworthiness (some examples below).
  • No business address.
  • No phone number for the business.
  • No website.
  • No domain.
  • No business email with a business domain.
  • No web presence on social media.
  • Not found on Google.
  • Just do not have the time.
  • Failure to know who gives business credit and who does not.

Coaching Models Works

Models that coach small business owners seem to be the best way for small businesses to establish and build their business credit. These coaching models are deliberate, support the business owner, and have a human being who is experienced advising the client.

For more on a coaching model, click here.

TONS of misinformation out there

Like anything online, there is a lot of information out there which is not true or just wrong. Many of our clients go to and spend lots of time on YouTube or reading stuff that is just not accurate. In some cases, clients do things which hurt their business credit such as apply for business credit cards before they have the preliminary business credit that is needed.

Companies like ours provide a team which will not only provide you accurate information but teach you about what you want to do. In fact, our advisors will walk you through every step of the way so you do not make mistakes in the work that you are doing towards your business credit goals.

Three things to watch out for when choosing a business credit program

1. Do it yourself plans.

Most do it yourself business credit models are on the surface great ideas. However, they are counterproductive because they amount of time and lack of information you have will never outweigh the efficiency and effectiveness of working with trained experts. The best programs are those which have live support, even if those plans are temporary and limited in scope.

2. SCAMS by those who do not know what they are doing.

Experience matters. Business credit development can be an art because it is different than building personal credit and many people who claim they are going to build business credit and use a canned program will never build anyone’s business credit.

When you are going to work with someone on business credit the people working with you should answer simple questions such as, What is business credit? How is business credit different than personal credit? How long does it take to build your business credit? Or What are creditors that will give you business credit when you have none or only a little business credit and which creditors require preliminary business credit for an approval?

3. Business credit is more than just business credit

Business credit is not just business credit – its way beyond business credit. So, anyone who tries to tell you different you should consider working with someone else. Business credit requires business credibility, without one cannot get approved for business credit (beyond basic). Furthermore, important pieces of business credit go way beyond having your Dun and Bradstreet address match that on the EIN letter and articles of organization or incorporation. Business credit includes web presence, knowledge of how lenders interact with borrowers, as well as when and who to apply for tradelines.

Before considering building your business credit one should know what business credit is and what value building business credit will have for the business. Business credit makes businesses more valuable and allows owners to separate their personal finances from their business, something that most small business owners fail to do.

For more information and a free assessment of your business credit, click here (no obligation).

Dr. Thomas Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico and Canada.

7 Things That Lenders Look for When Small Businesses Apply for a Loan

A recent survey demonstrated that nearly 2 in 3 small business owners sought loans for their businesses in 2021. However, small business owners should have advance notice of what lenders are looking for from potential borrowers in 2022. This article gets at some of the characteristics lenders will ask borrowers who wish to secure financing for their businesses.

By Thomas Tramaglini, Managing Director at BRP Onesta
info@BRPOnesta.com
www.backofficedepot.com
www.thomastramaglini.com
About Thomas Tramaglini

1. Business Credit

Business Credit should never be ignored – that is, generating business credit can be a difference maker when accessing secured or unsecured financing. Simply, business credit is how successful a business is in paying its bills which are linked to the business’s Employee Identification Number, not the owners Social Security Number.

If you are not sure if you have business credit, you can use a tool like NAV.com for free to see if you have any current business credit.

Some companies have programs where you can build your business credit. BRP Onesta has an affordable program where business owners can access and build their business credit with hundreds of different tradelines (Click Here to Access).

2. Time in Business

Time is business is very important for small business owners as lenders traditionally want to lend to businesses that have history versus a startup. The longer the time in business, the likelier it is that the business will continue to be in business therefore increasing the changes the loan will be paid back.

Lenders prefer a track record of successfully servicing previous loans and history of running a business. This makes it more difficult for new businesses to get funding as lenders are less likely to take the risk of lending to new businesses, especially those in business less than 2 years.

3. Business Borrowing History

Many lenders will check previous loan or borrowing history, including how the small business owner paid his or her bills in other business transactions. Lenders want to see positive payment histories, as well as few inquiries, late payments, collections, or mass UCC filings. Further, if a small business has had previous poor history with alternative lenders those lenders may have filed a lawsuit or judgement against the business ultimately blacklisting the small business from subsequent borrowing.

This article lays out several ways that your small business may be blacklisted by alternative or internet lenders.

4. Personal Credit Scores

Lenders will almost always do a soft or hard pull on the business owners’ personal credit, as their credit score is an indicator of their credit worthiness. Newer businesses will tend to be evaluated more from the owner’s personal credit than other factors, such as revenue or number of deposits. Further, many times credit score weighs into risk, which drives interest or factor tiers for total payback. Naturally, the better the credit history, the better the loan options will be for the borrower.

So, before applying for financing, it is important for small business owners to grasp their personal credit history and understand how it will impact their borrowing.

5. Cash Flow

Cash flow is a very important part of what the underwriters look at when reviewing a loan request. The lenders want to ensure that the business owner can service the debt that they are accruing. That is, the lenders want to know that the business owner can make the payments, with some form of reasonable cushion.

Some of the components of cash flow include the number of deposits that are made each month, the average daily balance of the business bank account(s), the number of NSFs and negative days, and the amount of revenue versus the expenditures made by the business. Further, it is not uncommon for lenders to review the types of expenditures made. For instance, if a business owner is continually making non-business-related expenditures using the business account, it can be a red flag to lenders that spending routines are not routine.

6. Collateral

Some banks, as well as credit unions will secure some of the loans that they made. Most SBA loans can carry some sort of guarantee with collateral, but banks cannot decline the SBA application just because the small business owners do not have collateral. In many cases, loans that are secured with collateral have longer terms and lower interest rates. However, this is only in retrospect of what other conditions that the lenders have in reviewing their loans.

7. Industry

Some lenders look at some industries different that other industries. For instance, industries like restaurants are less risks than residential construction companies that have only a few deposits a month. The team at BRP Onesta has a list of restricted or risky industries by NAICS code on its website.

Finding loans that suit your needs

As you can see, there are several different aspects of a small business that lenders look at. We highly suggest you have one of our experts review your financing needs before you apply. Doing so can help you protect your company from unnecessary credit pulls or countless unsolicited phone calls. You can contact one of our advisors by clicking here or calling (888) 743-7856

Dr. Thomas Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico, and Canada.

Where to Get Free Money for Your Small Businesses: Small Business Grant Portal

Without a doubt, small business owners want access to capital so they can run and grow their businesses. However, many small business owners who we speak with do not know where to start. So, to help small business owners access these free programs we have built a list of small business grants on our portal which we keep current weekly.

In this article, we provide an overview of current grant programs, highlight one current grant program, and list others that are available (scroll down)

By Thomas Tramaglini, Managing Director at BRP Onesta
info@BRPOnesta.com
www.backofficedepot.com
www.thomastramaglini.com
About Thomas Tramaglini

Is my business eligible for grant funding?

This is always a loaded question. However, most small businesses do qualify for some type of grant funding.

There are always different methods for how to find the right grant. We suggest that any small business owner looks based on:

  • Goals of grant (usually grants carry a greater mission to solve problems – for instance, grants that lead to job creation)
  • Industry – search for grants specific to your industry
  • Grants tend to address places of higher poverty

The key of looking for a grant is to not focus on just getting money. Instead, focus on how organizations that provide grants want you to spend the funds. Then, you can organize your application around how to match your business to what the organization is looking for grantees to accomplish.

Certifications – Where Grants Have Prevalence.

Does your business have a certification? Does the small business owner have a certification? Many grants are put aside for businesses that have a certification. Some of the certifications are:

  • Woman-owned small business
  • Minority-owned small business
  • Disadvantaged business enterprise
  • Veteran-owned small business

For more information on the certifications, and how to get your certification and others, click here.

7 Things Every Small Business Owner Should Be Ready for When Applying for A Grant

Grants represent a great way to access capital for a business, however there are several things which small business owners should be aware of before applying. In preparation for writing a grant, we have built an extensive, yet helpful list of important things which will help any small business owner in their pursuit of a small business grant.

This list of what to expect can be found here: Click Here.

Highlighted Grant Database: Grants.gov

For the month of May, we are highlighting the Grants.gov website.

Grants.gov warehouses thousands of different grants provided by the Federal government. Small business owners can search available grants at https://grants.gov/web/grants/search-grants.html. On the database you can look at grants by industry, funding instrument, agency, and opportunity status.

What Small Business Grants are Currently Available?

Small business grants are free money for small businesses which are provided by government, non-public, and for-profit entities. Most small business grants provide business owners an avenue to apply for a bigger goal. For instance, the US Department of Labor has hosted grants to small businesses in places of high poverty for the development of careers and creation of new jobs.

While it takes time and effort to research and apply for grants, the end game can be worth it as small business grants are funds which do not need to be paid back.

To help you get started, we always keep and refresh small business grants which are available to small business owners (https://www.backofficedepot.com/smallbusinessgrants).

Dr. Thomas Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico, and Canada.

8 Affordable Small Business Financing Options for The Post Pandemic Era

While the Economic Injury Disaster Loan (EIDL) and the Payroll Protection Programs (PPP) were beneficial for small business owners, as they say, “all good things must come to an end.” What it does not mean is that there are not great options out there for small business owners to take advantage of. We know that traditional bank loans and lines of credit are rarely out there but that does not mean access to financing has to be hard or expensive.

In this article, we will share a list of 8 different financing products which are easy to attain, and in some cases will cost you nothing.

By Thomas W. Tramaglini, Managing Director at BRP Onesta
info@BRPOnesta.com
www.backofficedepot.com
www.thomastramaglini.com
About Thomas Tramaglini

What’s out there for small business owners?

In the post EIDL/PPP era, what is out there for small businesses? We get that question a lot from clients to we put together a list of 8 options for small business owners. Also, you can apply through our platform as we do not charge clients broker fees or add on extra origination charges, ultimately making the product more affordable than going through loan brokers or directly through a website for business funding.

Small Business Grants

Small business grants are free money for small businesses which are provided by government, non-public, and for-profit entities. Most small business grants provide business owners an avenue to apply for a bigger goal. For instance, the US Department of Labor has hosted grants to small businesses in places of high poverty for the development of careers and creation of new jobs.

While it takes time and effort to research and apply for grants, the end game can be worth it as small business grants are funds which do not need to be paid back.

To help you get started, we always keep and refresh small business grants which are available to small business owners (https://www.backofficedepot.com/smallbusinessgrants).

Term loans

Term loans are easy to apply for and usually provide small business owners terms from 1 year out to 5 years. Approvals are based on underwriting guidelines specific to the industry, amount of loan, monthly revenue, credit score, business credit score, and time in business.

Small business term loans usually have set fixed interest rates and payments can be daily,

weekly, bi-weekly, or even monthly. For most term loans under $150K the only documentation needed tends to be an application, business bank statements, as well as proof of business. Some lenders ask for taxes if your funding request is for more than $150,000 or on a case-by-case basis.

Average Range for Borrowing: $1,500 to $550,000

Rate(s): 7% – 38% APR

Credit Score Requirement: 600

To apply for pre-qualification (no credit pull) for a Small Business Term Loan Click Here.

Equipment Term Loans with Rebate

Some equipment loans carry rebates which can be advantageous for small business owners. That is, a lender will lease to the small business a piece of equipment and provide a rebate at an amount which is parallel to the costs of the equipment loan. For instance, if it is determined that the equipment loan is for $25,000, the equipment is then amortized with interest over 60 monthly payments, without origination or fees. Then, upon receipt of equipment, a rebate is provided for the business owner for the equipment at the amount the equipment costs.

What is beneficial about the loan is that to an extent, equipment is tax deductible under Chapter 179 of the IRS Tax Code so what you are paying back is tax deductible. Also beneficial is that this loan is not one that counts as an MCA position and having a longer term make the payments more affordable than traditional term loans.

Average Range for Borrowing: $20,000 to $100,000

Rate(s): 15% – 20% APR

Term(s): 5 years

Credit Score Requirement: 680

Business Credit Score: Paydex Score of 80

To apply for pre-qualification (no credit pull) for a 5 Year loan click here.

Line of Credit

Lines of credit have the most flexibility. For instance, the beauty of a line of credit is that you only draw what you need when you need to. Applications for lines of credit are fast and have

flexible terms.

Range for Borrowing: $1,500 to $250,000

Rate(s): 7% – 28% APR

Term(s): Variable

Credit Score Requirement: 680

To apply for pre-qualification (no credit pull) for a line of credit, click here.

Short Term Loan

Short term loans are those which go from 6 months to 5 years. Most short-term loans have

weekly payments and little underwriting requirements. Further, credit is less important and while rates tend to be higher for small business owners, there is minimal paperwork needed and funds can be disbursed in as fast as 1 hour.

Average Range for Borrowing: $2,500 to $500,000

Rate(s): 8.99% – 34% APR

Credit Score Requirement: 450

To apply for pre-qualification (no credit pull) for a line of credit, click here.

Consolidation Loan

Consolidation loans present a host of different options for small business owners who already have debt or would like to combine working capital already taken. There are

different consolidation programs available which small business owners can use to ensure that they have the maximum economic performance they can have.

For originators, loan consolidation is an art. There are virtually dozens of ways to consolidate loans which can be helpful. Once you apply, our team will craft an option which provides you a simple, affordable road map for consolidation and beyond.

Average Range for Borrowing: $25,000 to $500,000

Rate(s): 9.0% – 39% APR

Term(s): Up to 3 years

Credit Score Requirement: 500 and up

To apply for pre-qualification (no credit pull) for a consolidation loan, click here.

Equipment or Vehicle Loans

Perhaps one of the best loans small business owners can take is for equipment or vehicles. With relatively low rates, equipment or vehicle loans can be efficient and lower in cost than working capital loans or merchant cash advances. Plus, the benefits are that the loan does not usually go on the business owner’s personal credit and has a longer term, up to 6 years.

Further, many lenders do not count an equipment loan towards working capital loans or merchant cash advances, so small business owners may be able to acquire more capital. Some equipment and vehicle lenders may also provide additional working capital as well.

Average Range for Borrowing: $25,000 to $150,000

Rate(s): 6.0% – 21% APR

Term(s): Up to 6 Years

Credit Score Requirement: 600

To apply for pre-qualification (no credit pull) for an equipment or vehicle financing, click here.

Asset-Based Loans

Asset-based loans are loans that are collateralized with either equipment or real estate. Loans that have collateral attached to it are usually cheaper than regular term loans and less risks for lenders to provide funds.

Asset-based loans for small business owners can be a great way to access lower-cost working

capital and the terms can be beneficial as well. Also, asset-based loans usually carry simple monthly interest, which means you pay interest by the month, not the term. If the borrower pays the loan back earlier, they can save on the interest as they do not pay the months that they do not have the loan. This is a similar loan product to a line of credit.

Average Range for Borrowing: $10,000 to $500,000

Rate(s): Simple Monthly Interest (starting at 1.5% per month)

Term(s): Up to 5 Years

Credit Score Requirement: None

To apply for pre-qualification (no credit pull) for an asset-based loan, click here.

Dr. Thomas Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico and Canada.

Maseratis, Jaguars, Mercedes, Investments, Swimming Pools…. Getting Caught for PPP/EIDL Fraud.

The List Grows…. More Frontline Zeroes of the Pandemic.

In recent weeks, I have been writing about how some small business owners took advantage of the generous funding to help small businesses during the height of the pandemic (The Zeroes of the Pandemic). Each day, more and more light is being shed about those who have defrauded our nation with EIDL or PPP fraud and again, I wanted to share more examples of what some people tried to get away with that in essence, shut out many of our clients and small business owners who deserved PPP or EIDL funds. In most cases, their actions made it easy for the government to catch.

Part III – An addition to the Small Business Owners (Real or Fake) Who Are Accused or Convicted of the Largest EIDL/PPP/CARES Act Fraud

By Thomas W. Tramaglini, Managing Director at BRP Onesta

info@BRPOnesta.com

www.backofficedepot.com

www.thomastramaglini.com

About Thomas Tramaglini Introduction

Many small business owners benefitted from COVID Relief programs in 2020 and 2021. Specifically, over a $1.2 Trillion dollars were provided to small businesses through programs like the Payroll Production Program and the Economic Injury Disaster Loan. Yet, since the onset of these programs, the government has been going after small business owners who abused these programs. Either by submitting inaccurate and in some cases fraudulent documents or by misusing the funds small business owners, one by one the government is going after small businesses.

NBC Calls PPP Fraud the Biggest Fraud in a Generation

Recently, Ken Dilanian and Laura Strikler of NBC recounted much of the fraud which had occurred with PPP and suggested that prosecutors called PPP the largest fraud in U.S.

History.

“Even if the highest estimates are inflated, the total fraud in all Covid relief funds amounts to a mind-boggling sum of taxpayer money that could rival the $579 billion in federal funds included in President Joe Biden’s massive 10-year infrastructure spending plan, according to prosecutors, government watchdogs and private experts who are trying to plug the leaks.

“Nothing like this has ever happened before,” said Matthew Schneider, a former U.S. attorney from Michigan who is now with Honigman LLP. “It is the biggest fraud in a generation.”

Most of the losses are considered unrecoverable, but there is still a chance to stanch the bleeding, because federal officials say $600 billion is still waiting to go out the door. The Biden administration imposed new verification rules last year that administration officials say appear to have made a difference in curbing fraud. But they acknowledge that programs in 2020 sacrificed security for speed, needlessly.”1

These Small Business Owners Lied About The Number of Employees They Had

If you read the dockets on sites like Arnold & Porter, many of the cases involve small business owners flat out lying on their PPP applications about the number of employees they had. While I believe that this could have been a practice more prevalent than what is known, the cases also show falsified documents made to back up the claims for how many employees a company did employ.

I guess these people did not read much Mark Twain. Twain once said, “Honesty is the best policy – when there is money in it.”

Liliana Gonzalez Used PPP funds for a Swimming Pool

Liliana Gonzalez lied about the number of employees she had and used some of her funds to put in a new swimming pool. When audited about how Gonzalez used her funds, the US Department of Treasury found that clearly, she misused the funds.

In a plea agreement description, Attorney Goldberg said:

“You’re seeing picking and choosing to do audits, or they’re getting information through the affidavits in the paperwork asking for the forgiveness that doesn’t add up. So, that’s when you’re going to see prosecutions like this come out of the woodwork on a loan for $170,000,” said Goldberg.

The public loan information for the PPP loan Gonzalez received indicates she claimed to have ten employees at her home business. Each making more than $81,000.

The loan was supposed to help Gonzalez retain employees during the pandemic, but prosecutors say the information was made up.

“There’s a lot of paperwork and affidavits and things that have to be filed in the forgiveness portion. And that’s opening up people to more liability and, of course, scrutiny in looking at these loans closer to make sure that they’re being used for what was asked for and what the government allows,” said Goldberg.

The PPP loan was then used to build a swimming pool, according to prosecutors. Goldberg says prosecutors are pursuing more significant penalties and more time behind bars as a deterrent.”2

Robert Williams Sentenced to More than 10 Years for PPP Fraud

“According to court documents, Williams obtained federal loans provided through the CARES Act that resulted in a loss of up to approximately $2.7 million. Williams applied for these loans at Midwest Regional Bank, PNC Bank and submitted false information to receive funding.

The investigation included a review of numerous PPP loan applications and financial accounts during the summer of 2020. Williams completed and submitted approximately thirty different PPP loan applications that contained materially false statements and false supporting documents related to the ownership of a business and the business’ payroll including the number of employees and monthly payroll expenses.

Investigators also determined that Williams did not use the PPP loan funds for any appropriate business expenses but used funds for his own personal benefit including the purchase of vehicles such as a Maserati Levante and a Jaguar, F-Pace. Williams also assisted several other businesses in brokering and submitting fraudulent PPP loan applications. During the investigation the FBI seized approximately $466,000 and vehicles. Williams has also agreed to an order of restitution for $1,231,491.” 2

It is clear that the government is beginning to find more and more cases where small business owners submitted fraudulent documents in their applications.

In my two articles, I ranked my top 15 Accused or Convicted of Fraud. I am not sure were any of these “small business owners” would fall on that list. Either way, it is horrible to see the means that people went to in order to defraud those who really needed the help. I fully expect to continue to see more cases of small business owners who submitted fraudulent 941 forms or purchased things which were just dumb, like Lamborghinis and Jewelry.

For now, again in case you missed it, here is our “Top Fifteen Alleged or Convicted List for Pandemic Relief Fraud.”

1) ($14M) Apocalypse Bella (https://www.justice.gov/usao-sdny/pr/two-texas-men-and-one-oregon-man-charged-fraud-scheme-obtain-over-14-million-covid)

2) ($11.1M) Amanda Christian (https://www.justice.gov/opa/pr/twenty-two-charged-connection-more-11-million-paycheck-protection-program-fraud-scheme)

3) Charles Petty ($11.1M) (https://www.justice.gov/opa/pr/twenty-two-charged-connection-more-11-million-paycheck-protection-program-fraud-scheme)

4) ($11.1) Charmine Redding (https://www.justice.gov/opa/pr/twenty-two-charged-connection-more-11-million-paycheck-protection-program-fraud-scheme)

5) ($7.6M) Jacob Carter, Quadri Salahuddin, Anwar Salahuddin, Christal Ransom (https://www.justice.gov/usao-sdny/pr/four-defendants-charged-76-million-covid-19-fraud-scheme)

6) ($7.2M) Don Cisternino (https://www.justice.gov/usao-mdfl/pr/seminole-county-man-charged-covid-relief-fraud)

7) ($6M) Christopher Lick (https://www.justice.gov/usao-ndms/pr/starkville-man-charged-more-6-million-covid-relief-fraud-false-statements-and-money)

8) ($5.8M) Julio Enrique Lugo (https://www.justice.gov/usao-mdfl/pr/davenport-couple-charged-58-million-covid-relief-fraud)

9) (4.5M) Christina Burden (https://www.justice.gov/usao-ndca/pr/oakland-woman-charged-million-dollar-scheme-defraud-pandemic-relief-programs-struggling)

10) ($3.8M) Gregory Blotnick (https://www.justice.gov/usao-nj/pr/new-york-and-florida-resident-charged-38-million-paycheck-protection-program-fraud-scheme)

11) ($3M) Anuli Okeke (https://www.justice.gov/usao-edny/pr/two-former-employees-new-york-branch-major-bank-and-accountant-charged-cares-act-loan)

12) ($2.2M) Abdreq Aaron Lloyd, Russell Schort (https://www.justice.gov/usao-or/pr/two-oregon-men-face-federal-charges-pocketing-millions-covid-relief-fraud-scheme)

13) ($1.9M ) John Jhong (https://www.justice.gov/usao-nj/pr/sussex-county-man-charged-19-million-paycheck-protection-program-fraud-scheme)

14) ($1.6M) Alicia Ayers, Andrea Ayers, Traci Proctor (https://www.justice.gov/usao-sdny/pr/three-defendants-charged-16-million-covid-19-fraud-scheme)

15) ($1.6M) James Kyle Bell (https://www.justice.gov/usao-dc/pr/nevada-man-pleads-guilty-election-fundraising-scam-and-cheating-taxpayers-out-paycheck)

Source: Arnold & Porter, 2021 https://www.arnoldporter.com/en/general/cares-act-fraud-tracker

There are other people or groups of people who have been accused or convicted (some for more greedy amounts than below and can be found here: https://tinyurl.com/2d5rm823.

References

1 – https://www.nbcnews.com/politics/justice-department/biggest-fraud-generation-looting-covid-relief-program-known-ppp-n1279664

2 – https://www.winknews.com/2022/04/14/cape-coral-woman-pleads-guilty-to-ppp-loan-fraud-accused-of-using-money-for-a-pool/

3 – https://www.justice.gov/usao-edmo/pr/judge-sentences-st-louis-man-more-10-years-federal-prison-bank-fraud-conjunction

*Disclaimer to reader – We believe that every person is entitled to due process and until convicted of any crime, anyone accused should be innocent until proven guilty. All contents in this article, including names and claims were confirmed in by research through the United States Department of Justice or the State the person is accused from.

Dr. Thomas W. Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shor

Damaging Mistakes That Small Business Owners Make When Financing Their Businesses.

Business owners tend to rely on borrowing money to grow their businesses.  However, it is not without pain that many small business owners and entrepreneurs experience when borrowing money.  In this article, we explore a bunch of damaging outcomes that occur when small business owners borrow money for their businesses.  By sharing what we see every day from small business owners we hope to share some foresight for small business owners who wish to access financing for their businesses.

By Thomas Tramaglini, Managing Director at BRP Onesta
info@BRPOnesta.com
www.backofficedepot.com
www.thomastramaglini.com
About Thomas Tramaglini

Small Businesses Need Financing

The typical small business regularly seeks and utilizes working capital of some type to address various needs including growth.  A recent dataset from Anna Serio suggested that in 2021, 57% of small businesses sought financing in amounts less than $100,000.  In another recent article published by Fundera, nearly 3 in 10 small businesses fail because they do not have access the capital they need. 

So, small businesses need working capital to fulfil their short and long term needs and they seek funds in all sorts of avenues, from SBA loans to Merchant Cash Advances.  In 2021, we surveyed over 1,000 small business owners about their experiences with seeking funds for their small businesses. 

Our data showed several commonalities which were interesting:

  • 68.8% of small business owners said that they sought working capital without restrictions
  • 43.1% of the small business owners said that speed in receiving funds mattered over most other factors, including rate
  • 92.5% of small business owners we surveyed said they wanted an SBA loan but only 1.3% said they had received an SBA loan.
  • The most popular loan product sought in 2021 was a Line of Credit

What are the unintended consequences of borrowing money to finance your small business?

Clearly, small business owners look for financing for their small businesses.  The data supports our work with small business owners as they seek financing that is fast and easy.  However, many times small business owners face the unintended consequences of borrowing money.  From our data and experiences, we have put together a list of some different consequences that we see small business owners encounter when borrowing money. 

Using Personal Credit to Finance a Business

This is one of the biggest areas we encounter small business owners taking a hit.  Small business owners take personal loans and use personal credit to finance their businesses.  When small business owners finance their businesses using personal credit or personal loans they generate lower credit scores, reduce the amount of credit they can use for their personal lives and jeopardize losing everything.

Risking Personal Assets

This occurs when small business owners pledge their personal assets to back what they are doing for their businesses.  For instance, some small business owners personally guarantee loans they take or even worst, they collateralize their homes and savings.  When businesses cannot pay their bills, the lenders will come looking for you to satisfy your commitment.

Co-Mingling Company Credit with Joint Credit

Small business owners who have joint credit with other family members (such as spouse or children) run the risk of having people who are not associated with the business hurt the company’s credit or business owner’s personal credit.

Not Paying Your Bills on Time

Not making payments on loans or credit cards on time each time they are due can hurt your ability to borrow money for your business or attain vendor accounts. 

Using Your Family’s Money

Routinely, we see small business owners using their family’s savings or personal credit for their business.  Once this becomes a regular practice, business owners cannot carry enough cushion to get them through hard times if they come up.  The idea is that eating up your personal credit for business expenses weakens your safety net.

Failing to Build Corporate Credit Correctly

From time to time we find small business owners either confused or misinformed about how to develop corporate credit.  Incorporating your business allows your business to be separate from your personal wealth.  If one understands that there is a process for building appropriate corporate credit and follows that process correctly, it is easy to separate personal and business wealth.  However, often we see someone trying to build their corporate credit by getting a Uline account or a Grainger account and failing to harness how to build progressive corporate credit.

Trying to Accelerate Corporate Credit Too Quickly

Having adequate business credit takes time and many business owners try to build their credit too quickly.  It takes time to build corporate credit to levels where small business owners can access financing without a personal guarantee or strictly on their business credit.  Some business owners turn to just applying for corporate cards and getting declined, or those cards go on their personal credit.

Poor Follow Up on Building Corporate Credit

It takes effort to consistently build your corporate credit.  In many cases, small business owners fail to keep track of their progress and waste their business credit.  They tend to miss key benchmarks or elements that can increase their credit. 

Overextending Borrowing Capacity

There are many times we see small business owners take on debt and do not truly understand what that means to their profit margins, etc.  For instance, we see small business owners regularly take Merchant Cash Advances.  Those advances can carry 50-55% interest so if you do not have profit margins that would yield enough to make these MCAs work, then it is probably not a good idea.  We see small business owners utilizing these risky practices regularly. 

So what?

Small business owners want access to business financing but at what cost?  In this article we provided real things that happen when small business owners take on financing.  In many cases, small business owners never see what is coming until it is too late. 

The best financing programs for small businesses at those that utilize corporate credit, which carry low interest and that do not carry a personal guarantee.  To build adequate corporate credit, small business owners need to build their portfolio of tradelines which have a record of successful payments and depth.

To learn more about our programs that help build corporate credit, please click here.

References:

1 https://www.fundera.com/resources/small-business-lending-statistics

2 https://www.finder.com/business-loan-statistics

3 https://www.fedsmallbusiness.org/medialibrary/FedSmallBusiness/files/2021/2021-sbcs-employer-firms-report

  •  

Dr. Thomas Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico and Canada.

What Do Small Business Owners Need to Know About Filing Their Taxes for 2021?

Did you receive EIDL or PPP proceeds in 2021 and you do not know how that is handled with regards to your taxes? What are the new requirements for the submission of taxes for small businesses in 2021? Indeed, for Small Business Owners Tax season brings on a layer of anxiety and additional work. While some small business owners use accountants, many small business owners file their taxes on their own. In this article, we provide an overview of some of the changes which small business owners should be aware of when preparing to submit their taxes either through an accountant or on their own.

By Thomas Tramaglini, Managing Director at BRP Onesta
info@BRPOnesta.com
www.backofficedepot.com
www.thomastramaglini.com
About Thomas Tramaglini

Introduction

Tax season is in full swing. In most cases, corporate taxes are due to the Internal Revenue Service on April 15th. If you have an S-Corporation, your corporate taxes were due on March

15th (unless your fiscal year is not operating on a calendar year). There have been some changes that have been made by government changes or additions to legislation (much in COVID Relief legislation), so here is a short recap of some of the changes.

Small Business Tax Changes for FY 2021

American Rescue Plan

Credits for Paid Leave Because of COVID Vaccines

The American Rescue Plan of 2021 provides guidance on allowing small business owners to claim refundable tax credits for their employees. This is to reimburse them for the cost of providing paid sick and family leave to employees due to COVID-19. This includes leave taken by employees to receive or recover from COVID-19 vaccinations. ARP tax credits are available to eligible employers who paid sick and family leave from April 1, 2021, through September 30, 2021.

Employee Retention Credit: The American Rescue Plan extended the ERC until December 31, 2021.

PPP and EIDL

If you received Economic Injury Disaster Loan proceeds in 2021 the funds do not count as taxable business income for 2021. However, it is important to retain detailed records for an audit that can be ordered by the Small Business Administration (SBA) or Department of Justice.

You can use EIDL funds to pay taxes to lower your accrued liabilities.

Did your small business receive a PPP loan in 2021? Like EIDL, the Paycheck Protection Program (PPP) loan (forgiven or unforgiven) does not count as business income and you are eligible to write off allowable business expenses, even if the PPP loan was used to pay those expenses. Learn more about allowable uses of EIDL and PPP here.

Digital Payment Services (PayPal, Venmo)

If customers pay for services or goods through a digital pay service such as PayPal or Venmo and the amount is above $600 it should be counted as income. Beginning in 2022 those digital services are required to report those metrics to the IRS, and this can be an easy place for an audit.

Sick and Family Leave Credits

Sick and family leave credits: Eligible employers can claim refundable tax credits that reimburse them for the cost of providing qualified sick and family leave wages for employees on leave between April 1, 2021, and September 30, 2021, either for the employee’s own health needs or to care for family members.

401(k) Contributions to One Participant or Solo 401(k)

Business owners with no employees can contribute up to $58,000 in tax year 2021. In 2022, they can contribute up to $61,000 to a one-participant or solo 401(k), with an additional $6,500 catchup if the owner is over 50.

Meals

Do you claim business meals? Business meals at restaurants are 100% deductible for tax years 2021 and 2022 (up from 50%).

Other Tax Stuff

The standard mileage rate for business use of a vehicle is 56 cents per mile for the 2021 tax year. In the 2022 tax year, the rate increases to 58.5 cents per mile.

Charitable Gift Deductions increased: C Corporations are still allowed to raise the limit for cash donations from 10% to 25% for the 2021 tax year.

Get Help if Needed

If you are unsure about your tax needs, need to file taxes from previous years, or just have

questions, please contact our team of advisors today.

Dr. Thomas Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico and Canada.

BRP Onesta is not an accountancy and does not give advice on tax decisions which would be better answered by a CPA or tax professional. In other words, if you have a question, as your accountant.

Nearly Every State Requires Annual Corporate Filings: It Is Probably Time for You To File Yours.

Small business owners and entrepreneurs must balance the grind of their work each day with the compliance requirements to run their businesses effectively and legally. One compliance attribute which our clients and others deal with each year is the filing of their annual report. In this article we tackle what an annual report is and provide resources for small business owners and entrepreneurs to complete their reports.

You can also scroll down to see your state’s annual filing requirement(s)

By Thomas Tramaglini, Managing Director at BRP Onesta

info@BRPOnesta.com
www.backofficedepot.com
www.thomastramaglini.com
About Thomas Tramaglini

Corporate Filings are Important

Are you a small business owner? Did you file your annual report for 2021? Failing to file your business or corporation annual compliance documents can lead to a business being suspended or in some cases forfeited without small business owners knowing it.

In 2021, BRP Onesta surveyed over 1,000 (1,292) small business owners. 35.1% of the small business owners who responded said that they had no idea of whether they needed to file corporate filings for the year. We also audited 2,400 of our clients and nearly 20% of our clients had deficiencies in their corporate filings.

What is an Annual Report?

An annual report is a document filed by non-profit and for-profit corporations, limited liability companies, and limited liability partnerships must file with their state which the business is filed in, usually each year. The content of the annual report usually outlines the status of an organization.

Annual Reports Differ from State to State

State governments very in how they require small businesses to file annual reports. Some state Secretary of State offices (or similar agencies) require Annual Reports to be files on different timelines (like biennial or decennial).

Our team is regularly asked about when and what to do from clients regarding these filings, so we decided to put together a chart for our clients and others to review.

Critical Things Associated with Annual Reports

There are some critical things that are associated with annual filings, so we have compiled a list of things to remember when you are considering corporate filings:

  • While nearly every state requires an annual filing of some sort, not every state requires the same information. For instance, Maryland requires different reporting (taxes and operation) and New Jersey requires less information.
  • States that require corporate filings usually require a payment to keep the business in good standing.
  • Those business owners who fail to pay their fees can have penalties added.
  • States process filings at different rates of speed. Some are online only, some mail in only.
  • Small business owners jeopardize their Certificate in Good Standing Status if they fail to file their annual report. This can have a detrimental effect in areas such as funding, grants, or acquiring new licenses.

What Are Your State’s Requirements for Filing?

Considering each state has different requirements, we try to keep a running list on our website. For our list, we break down both LLC and Corporation requirements.

See your state’s filing requirements

Ensure Your Corporate Filings Are Done on Time and Accurately

If you are a small business owner or entrepreneur, we highly suggest using our company to prepare your corporate filings for you. It is inexpensive and will allow you to focus on your typical everyday work.

At BRP Onesta, we have a team of experts who prepare and file small business filings such as annual reports in all 50 States.

Dr. Thomas Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico and Canada.

Applying for an SBA loan? What brokers and banks cannot do to small business owners.

Hundreds of thousands of small business owners apply for loans from the US Small Business Administration (SBA) each year. However, small business owners should know what SBA agents and banks can and cannot do before applying. This article shares some things that small business owners should watch out for when applying for an SBA loan.

By Thomas Tramaglini, Managing Director at BRP Onesta
info@BRPOnesta.com
www.backofficedepot.com
www.thomastramaglini.com
About Thomas Tramaglini

Small business owners are easy targets.

According to the SBA, over 50% of all small businesses have borrowed money in the past 5 years. And continually one of the most popular loan products we are asked about are the SBA 7a, Express, and 504 loan products.

One thing we regularly see is that many small business owners are taken advantage of by banks or brokers. With so much misbehavior and shenanigans out there, we wrote this article to outline several things that banks, and brokers cannot do to small business owners while they apply for an SBA loan.

Two reasons why banks and brokers take advantage of small business owners

The team at BRP Onesta helps small business owners start, maintain, and grow their businesses. Each year we see hundreds of small business owners who are taken advantage of for two basic reasons:

  1. Small business owners do not know the rules so they will do whatever is asked of them by banks or brokers.
  2. Brokers know that SBA loans do not pay much. That is, unless the SBA loan is for millions, merchant cash advances, equipment loans and term loans pay much better than SBA loans. Therefore, it is not uncommon for brokers to ask for up-front fees or due-diligence costs. In many cases, brokers lie to small business owners by telling them the costs are reimbursed at the closing or refundable if the loan does not fund.

Things that SBA banks and brokers would love to do but are prohibited from doing so.

Small business owners beware – these are things that small business owners we interact with typically are asked to do or participate in.

Due Diligence Costs: Due diligence costs are fees paid up front for legal fees before submitting the loan. Not only is this practice illegal,

Commissions, referral fees, broker fees: These fees are common in different loans, including equipment and real estate loans. Even Merchant Cash Advances and term loans have these structured in different ways. Banks are not allowed to charge any commissions, broker fees or referral fees. In some cases, fees can be assessed if provided using SBA Form 159.

Fees for legal services: Most banks do not charge fees for legal services unless the lender is being billed by an attorney at an hourly rate for set services.

Fees for services: This is a common issue with loan brokers who promise small business owners that they will be working on their SBA loan package for them. Sometimes these services can be approved if provided on SBA 159 (after loan approval) but up-front fees like due diligence are not allowed and illegal. If you are a small business owner and you are asked for an upfront fee, you are probably getting ripped off.

Add-On Interest is charged one time, in advance, and added to the loan balance. The amount of interest in not compounding or decreasing according to loan balance. This is not allowable. And while SBA loans do not allow for some early payback without penalty (usually because of the guarantee from SBA), SBA loan interest is based on balance remaining.

What do small business owners do to protect themselves?

It is imperative that small business owners do things to protect themselves as they apply for SBA funding. Even if small business owners do not get approved for an SBA loan, they should not be taken advantage of.

Small business support companies like BRP Onesta provide realistic, free origination on SBA and other loans. We are honest, care about the business owner, and work with the business owner to provide a pathway for funding, even if he or she is not ready.

If you would like to have free qualification review for an SBA loan, please contact us at any time. We can usually provide a pre-approval in 5 minutes.

Dr. Thomas Tramaglini is the Managing Director for BRP Onesta, a company that supports small businesses. By offering a host of important and affordable services that small business owners tend to not have time to do themselves, the team at BRP Onesta can help small businesses grow infinitely. Although located in on the famous Jersey shore, BRP Onesta serves clients in all 50 states, Puerto Rico, Mexico and Canada.