SBA Loans vs. Conventional Loans: What’s The Difference?

SBA Loans vs. Conventional Loans: What’s The Difference?

Conventional business loans are popular because they are offered by various major financial organizations. However, newer enterprises typically have a shorter credit history, so they may not be eligible for conventional business loans. To those who may not qualify for or prefer not to take out a traditional business loan, the Small Business Administration (SBA) offers a variety of loans tailored to the needs of smaller, newer enterprises. Read on if you’re trying to decide between a traditional loan and a Small Business Administration loan.

What is an SBA Loan?

SBA loans are guaranteed by the federal government and made available to small businesses through the Small Business Administration. The Small Business Administration guarantees small business loans from SBA-sanctioned lenders for as much as 85 percent of the loan’s value. That decreases the lender’s exposure to default by the borrower.

The average interest rate on an SBA loan is between 3 and 7 percent. This rate is significantly lower than small business loans and credit cards.

What is a Conventional Loan?

Financial institutions like banks and credit unions are the primary sources of conventional loans. Lenders will loan you a quantity of money upfront, and you will have to pay it back over time. Fees and interest rates on loans are contingent on the borrower’s credit history and the lending institution.

Unlike SBA loans, conventional loans do not have government backing. If the borrower fails to make payments, the bank bears the loss. Consequently, a high credit score, solid financials, and a proven track record as a business owner are typically prerequisites for qualifying for a conventional loan.

Conventional vs. SBA Loan

Some differences between an SBA loan and a conventional loan include:

  • An SBA loan requires less paperwork than a conventional loan
  • An SBA loan is more complicated
  • SBA loans usually take longer to get approved
  • SBA loans offer lower interest rates
  • An SBA loan has longer repayment terms
  • SBA loans provide more flexibility
  • It’s harder to qualify for a conventional loan than an SBA loan  

Bottom Line

It’s crucial to weigh the pros and cons of both SBA loans and conventional bank loans before committing to one. As you consider your options, keep in mind the status of your business (whether it’s just starting or has been around for a while), your credit, and your current financial situation.

Key Marketing Directives for Nonprofit Organizations

Key Marketing Directives for Nonprofit Organizations

Nonprofits need to put significant effort into their marketing activities because their operations often depend on their ability to generate monetary or in-kind donations from individual donors, foundations, and government grant sources. Marketing is particularly important for organizations that generate revenue from their operating activities. Educational institutions and affordable housing developers, for example, must often compete with the marketing initiatives of for-profit business entities. Here are some ways that nonprofits can effectively market their mission and services.

Create Outstanding Proprietary Content

People who are interested in contributing to nonprofits by making donations or volunteering their time will often start a directed search for opportunities online. Marketing for non-profit groups must reflect adequate attention to creating a conspicuous presence with high search engine visibility. Furthermore, people who learn about a nonprofit through its outreach activities need to be able to find information about it online which successfully demonstrates the scope of its work and its ability to use resources well. Good proprietary website content in addition to active social media participation conveys credibility and resourcefulness.

Enhance Online Presence on Third-Party Platforms

Marketing for non-profit organizations involves careful attention to nonproprietary content. The information that people find about nonprofits on third-party websites can play a big role in their overall perception of them. Marketers must put some time into developing organizations’ account profiles on nonprofit directories such as Idealist and VolunteerMatch. Likewise, nonproprietary content with links can augment initiatives to expand online outreach initiatives.   

Create Messaging That Resonates with People

Nonprofits which operate in service areas that do not have full public support must be particularly purposeful in their presentation of relevant information about their cause. Marketing for non-profit organizations should include an emphasis on more than one practical benefit of their work. Messaging that they can direct to several different interest groups helps them create awareness about multiple sides of complex issues such as housing, education, or medical care.

All nonprofits achieve their designation as charitable organizations by pursuing objectives that benefit the public. Nevertheless, the need for a nonprofit to address a specific unmet need or the practical utility of the work that it does may not be apparent to everyone. When nonprofits are creating marketing material, they need to present their mission and activities strategically. They cannot assume that the importance of their work or how they seek to advance it is within the realm of common knowledge. Marketing activities are nonprofits’ chance to both educate and persuade their target audiences.


Independent Contractor Explained

Independent Contractor Explained

There has been a dramatic increase in the number of small enterprises that rely on freelancers and consultants instead of full- or part-time workers. However, employers need to know the ins and outs of the independent contractor categorization to comply with U.S. Department of Labor (DOL) and Internal Revenue Service (IRS) rules before entering into an independent contractor arrangement with a worker.

What is an Independent Contractor?

A company or individual that provides services for a third party is considered an independent contractor. A contract is signed between the two parties outlining the contractor’s responsibilities, payment, the scope of work, and other terms. Businesses frequently use Independent contractors as a cost-effective alternative to hiring new employees to fill temporary roles.

How Do Employees and Independent Contractors Differ?

DOL: When deciding if someone is an independent contractor, the Department of Labour looks at the type of work and how much control the person has over it. It also looks at the worker’s chances of making or losing money, how long the relationship will last, and more.

IRS: The IRS considers a person to be an independent contractor if the person paying them only has control over the results of the work, not necessarily how it is done. An independent contractor fills out the IRS Form W-9, and the IRS Form W-4 is filled out by an employee.   

Previously, the IRS employed a 20-factor test to assist businesses in determining whether someone was an independent contractor or employee. However, it has now compressed these into three categories.

Relationship of the parties: Does the company offer any benefits? Is the work arrangement governed by formal contracts or oral agreements?

Financial control: Is the business in charge of the financial aspects of the worker’s job?

Behavioral authority: Can management determine which tasks get completed and how they’re completed?  

Examples of Independent Contractors

Some examples of independent contractors include:

  • Freelance writers and graphic designers
  • Real estate agents
  • IT professionals  

Advantages of Using Independent Contractors

Lower overhead since the contractor is responsible for the overhead costs

Independent contractors are often experts with a specialized skill set in their area

When the project is finished, you can opt to offer another project to the independent contractor or not  

Disadvantages of Using Independent Contractors

They may not be available when you need them

Unless specified in the contract, any work the contractor does on your behalf may not be legally your property

You may be subject to an audit by the IRS, the DOL, or another regulatory agency if they determine that contractor more accurately fits the employee definition  

Bottom Line

Hiring an independent contractor can save money when a company has one-time needs or wants to get something done that a regular employee can’t. An independent contractor can be a great asset to your team if you pay them properly and follow all applicable regulations set forth by the IRS and the Department of Labor.

What is The Right Organizational Structure for Your Company?

To successfully run a firm, you must be able to distribute responsibilities to your staff. It’s also important to have the last word on all projects or choose people you trust enough to grant final approval if your company is larger. There are many different organizational structures to choose from, and each one will help you clarify the duties and responsibilities of the various people and departments within the company.

What Does Organizational Structure Mean?

A company’s organizational structure consists of its policies, procedures, roles, relationships, and duties, all of which work together to decide how the business will operate to achieve its objectives. It also oversees the reporting relationship between middle management, upper management, executives, and the organization’s owners.

Types of Organizational Structure

There are eight organizational structures, each of which is either centralized or decentralized.

1. Hierarchical Structure

This is a centralized organizational structure. The company’s chain of command begins with the board of directors and extends to the chief executive officer through the rest of the organization from top to bottom. A staff director oversees all divisions under this organizational structure and reports to the CEO.

Pro: Higher-quality, more specialized work

Con: Lack of independence  

2. Functional Structure

This is a centralized organizational structure where each department head is the staff director.

Pro: Specialized, self-sufficient teams

Con: Does not encourage cooperation among departments  

3. Divisional Structure

In this centralized organizational structure, each product or service team has full autonomy.

Pro: Departments are more autonomous

Con: More internal competition as opposed to external  

4. Flat Structure

This is a decentralized organizational structure where almost employees have equal power, with executives having slightly more authority.

Pro: Employees are more independent and engaged

Con: Lack of supervision and mentorship  

5. Matrix Organizational Structure

This centralized organizational structure allows workers to move between departments as needed.

Pro: Dynamic employees with diverse skill sets  

Con: Potential for constant changes  

6. Team Structure

This decentralized organizational structure allows supervisors to collaborate with employees from other departments as needed.

Pro: Transparency, growth, and productivity

Con: Confusion and disorganization  

7. Network Structure

This decentralized organizational structure not only streamlines communication between departments inside a single office but also between offices and their respective teams of freelancers, third-party firms to which certain tasks are outsourced, and so on.

Pro: Helps define the organizational structure for multinational corporations

Con: Potentially vague when it comes to decision-making processes  

8. Projectized Structure

This is a decentralized organizational structure where teams are assembled for projects and disassembled upon project completion.

Pro: More flexibility and versatility.

Con: For workers, this could mean increased stress and less prospects for advancement.   

Bottom Line

The most effective organizational structure differs from company to company. Consider the size of your company, the value you place on employee engagement, your tolerance for risk-taking and innovation, and your desire for a flat organizational structure when making your decision.

Franchise Options for Every Budget

Franchise Options for Every Budget

Any budding entrepreneur who wants brand recognition and support should consider opening a franchise. People often think buying a franchise is too expensive, but you can get started for less than $10,000. This article is for people who want to be business owners and are interested in owning a successful franchise. We’ve compiled a few franchises that require an investment ranging from $3750 to upwards of $1M.


Jazzercise: Initial investment costs range from $3,750 to $21,750

Cruise Planners: Initial investment cost starts at $10,995   

$25,000 to $49,999

Bar-B-Clean: Initial franchise costs start at $30,000, and the average initial investment is $31,950.

Class 101: The total investment expenses range from $45,890 to $63,300, and the franchise fee is $32,900.

Tutor Doctor: Initial franchise costs range from $44,700 to $49,700, with an estimated initial investment range of $73,295 to $100,995 (depending on the territory).  

$50,000 to $74,999

Fetch Pet Care: Total costs range from $68,000–$76,000.

Caring Transitions: The total investment is $58,912 to $82,712.

ShelfGenie: Minimum investment is $70,100  

$75,000 to $99,999

FastestLabs: Initial startup expenses range from $83,309 to $96,650.

British Swim School: Average starting costs range between $93,700 and $125,850.

Screenmobile: The initial franchise investment ranges from $91,975 to $183,770 and covers everything from the franchise license to the promotional materials and equipment to the required training and even a trailer.  

$100,000 to $249,999

Molly Maid: Depending on the scope of service, the upfront cost might be anywhere from $110,000 to $155,200.

Brightstar Care: Initial investment costs can range anywhere from $105,735 to $170,457.

iLoveKickboxing: The price tag can range anywhere from $185,000 to $245,000.  

$250,000 to $499,999

Menchie’s Frozen Yogurt: The average overall cost is between $300,000 and $350,000.

School of Rock: Initial investment costs can range from $322,500 to $521,100

Skoah: To open a Skoah franchise, a minimum investment of $260,000 is needed.  

$500,000 to $999,999

ZIPS Dry Cleaners: The price tag may be anywhere from $729,700

The Goddard School: Investment expenses typically range from $698,300 to $873,600.

Dogtopia: Initial investment costs range from $668,298 to $1,444,264.  

Over $1M

Sonic Drive-In: The total investment for a typical Sonic, excluding land, ranges from $1,242,200 to $3,537,700.

Sky Zone Trampoline Park: Getting a Sky Zone franchise requires a minimum net worth of $1.8 million.

Woodhouse Day Spa: The initial investment is projected to be between $1,231,617 and $1,833,067.  

Bottom Line

One way to enter the business world is to invest in a franchise. Take advantage of a well-known brand name while reaping the benefits of being your own boss. Owning a franchise can yield substantial financial rewards if you create a solid strategy for expanding your business and increasing your revenue. Contact My Commercial Capital to finance your franchise investment.