finances

The Dark Side of Start-Up Financing and an Open Letter to Direct Business Lending

Creative Business

Dear Direct Business Lending,

Let me make this as clear as possible: stop calling me. Furthermore, forget you ever heard of me. Erase my contact information from your collective consciousness, stop passing my number from one phone jockey to the next. Just. Stop.

Sincerely,

The Woman Who Never Asked You to Contact Her in the First Place

Leaving no stone unturned in the hunt for start-up capital has a high probability of waking up some snakes.

I’d researched enough to know that it was considered next to impossible for a new business to secure start-up funds and working capital by traditional means, but it still seemed like the place to start. Just like writers who know it’s tough to get an agent or publisher to read your manuscript, but go that route for a while before considering self-publishing. It’s what you do.

Sure, there’s venture capital, but that’s more for tech start-ups or inventions/new products–there aren’t a lot of angel investors who are interested in a small town, local retail specialty shop. (Though I did reach out to the director of the local arts center, and got a response, she just didn’t have any referrals for me at the time I was looking.) And there’s traditional investors, but those strategies involve giving up a piece of your business and, from what I’ve read, seem to be more focused on finding things that will build and then can be sold (the exit strategy) to, hopefully, recoup their investment. Not the route I really wanted to take. (Plus, by the time that was my last resort I was tired of asking others for permission.)

Entrepreneur magazine and other business blogs have been singing the praises of non-traditional (usually online) start-up funding for businesses for quite a while. According to some, besides friends and family loans (which, no), it’s really the only way to go. Well, I tried that, and here’s what happened.

First you have to weed out the sites that really are in the business of lending to existing small businesses who want to expand. Kabbage.com is one of that sort: they offer lines of credit, which is better than a flat-out loan, but you have to show an existing business history to qualify (just like with a traditional bank). They’re on my radar for later on down the line, but not a good option, now. Lending Club actually is somewhat reputable. but I could qualify for maybe $10K when I contacted them (not even enough for inventory, much less anything else). Most of the rapid-response lenders concentrate on your credit score. Mine’s good, but it’s not enough on it’s own. Like the banks, they want you to have a good score, which takes credit history to build, but you have to stay within a certain amount of current credit usage for them to be happy. That’s my downfall: I carry balances on my credit cards, more than the 45% usage level they want.

Or, that was the reason Seek Capital turned me down. Seek was a company that showed up as a search result and I figured, hey, why not? I got a call back from them fairly quickly and Ryan explained how they were able to offer unsecured (no collateral to back it up–we have some equity in our home because we purchased below market value, but since we only bought last year it’s not a lot, not enough to really consider as an option) loans. They arrange for business credit cards that can be liquidated without the cash withdrawal penalties, no interest for the first 12-24 months, and then interest rates comparable to bank loans and not the usual credit card APR. Starting a business on credit cards is nothing new, this was just a different approach, one I’d never heard of before.

But, again, nothing ventured, nothing gained, right?

Now, to see if I qualified, they (like anyone else) needed to see my credit scores and reports. Thing is, they don’t want to do a hard pull of said info as that can lower your credit score, so they had an interesting work-around. They ask you to create an account at one of two credit monitoring sites for a $1 trial period that lasts a week. You then turn over your login info so they can access your reports (because it’s not a ding if you check your own credit report/scores). I wasn’t cool with this on several levels:

  1. Handing over passwords and security question answers, even if they were complete fabrications for the sake of the exercise) just defies all manner of information safety anything. Not happening.
  2. Both of the services they recommend have very sketchy reviews about charging past your cancellation and the 7 day trials being more like 6, in reality. Not happening.

I did ask if I could pull the reports myself and just send them in directly. And while I prefer using MyFICO.com (where I get my annual free reports, no hiccups or sneaky practices), they preferred Experiean. Fine, Experian is one of the 3 reporting agencies and while they also offer a monitoring subscription, they also offer a flat fee for all three reports and scores. Yes, I’d much rather pay $40 for the reports and be done with it than $1 for a “free trial.” I know it sounds counter-intuitive, but it felt like the safer option, overall.

So where does DBL come in?

Well…. A couple of days after Seek said no, I was driving home and my phone rang. People don’t call me that often, so I didn’t have my earpiece in and had to fumble for my phone and also fumble with the iPod to turn off the audiobook I’d been listening to. Thank goodness it wasn’t raining!

Anyway, it was some stranger from Direct Business Lending saying that he’d been given my information and that I was looking for a business loan.

Two problems with this:

  1. I’d already decided to go another way with The Crafty Branch and was not seeking funding any longer (which I told him).
  2. WHO had given him my information???

When questioned, random caller #1 (I didn’t get his name being both flustered and driving at the time, not exactly prime note-taking situations) admitted that it was Seek who’d passed along my information. I explained that I hadn’t authorized that and that I wasn’t having this conversation. End of story, or so I thought.

That was Thursday, June 11, 2015.

Imagine my surprise when I got not one, not two, but three calls from them the next day! After the first call of the day, I used an app on my phone to block their number. This apparently means that it might ring once (or not) before being routed straight to voicemail, but it has more or less saved my sanity from these guys who just. won’t. give. up. If it had been anything other than a violation of my privacy I might have admired their tenacity.

Jennifer, hey, this is Mike from DBL. I’m excited to give you a call back, it looks like you spoke with one of my friends yesterday. My number is xxx-xxx-xxxx extension 644. Looks like I’ve got a few options for ya and want to go ahead and talk to you some more. [repeats phone number]

While fairly innocuous, the voice mail kinda set me off. Friday has been a long, tiring day, and that chirpy voice mail just pushed the wrong button. So I called ’em back, and I left a voicemail of my own. I’m not proud of it, I’m fairly certain I avoided swearing at them, but I do recall the words “or I will rain down 7 kinds of holy hell on you” leaving my mouth. Not my finest moment, but it is what it is. I also promptly filed a complaint with the BBB in Utah (though I know better than to expect anything from it–the BBB can be bought folks. Sorry to shatter your illusions.)

I also fired off a ‘not cool’ email to my contact at Seek the first day and, after the continued calls on Friday, called Seek directly. Seek denies sharing my information, but who else could they have gotten it from? That piece of information was the resolution I requested in my BBB complaint, but I’m not holding my breath.

After a quiet weekend I was really hoping they’d forget who I was. No such luck, as Monday, June 15, 6 calls from DBL were logged and blocked, including this gem of a voice mail:

Hi Jennifer, this is Benjamin with DBL I just received your file and request for some business funding and I went ahead and gave you a call. I actually did just pull up your file right now and looks like you were upset that a company had gave us your email and your phone number. I mean, that’s really not a lot of information to pass on to someone. Either a) you’re a start-up company or you didn’t make enough money with your current company where they wanted to even take a look at your application or really see how much you’re asking for. So they sent you to us and we’re the start-up specialist. There won’t be a bunch of other companies contacting you because we’re really the only ones out there who specialize in start-ups. So, you know, you could get upset that they passed us your simple name and phone number that someone could get out of the phone book–maybe you can’t get someone’s email out of there–but y’know I’d go ahead and give us a chance. There’s a reason why they had us contact you, we do specialize in start-ups, but I mean they didn’t even really take a look at your file or want to give you funding so I don’t know why you’d be upset they’d pass on to someone that could actually help out and get what you wanted to. So if you want to you can give me a call back, I’d appreciate it, we could dialogue and see you’re a good fit for us and we’d be a good fit for you, as well. My number is xxx-xxx-xxxx extension 628, and I just want you to be as optimistic as possible. It’s not a huge deal, I get SPAM and junk mail from other websites I sign up at and you know I don’t get mad that my email is flying out there [laugh] people are sending me stuff. it is what it is, it’s the age of technology! And we’re here to help, Jennifer, so I hope you see that. Thank you.

First off, did you catch how he compared their calls to SPAM and junk mail??? Hit the nail right on the head, I think! And, no, to my knowledge there’s not a way to look up cell numbers in the phone book. In fact, my number is on the do not call registry because I don’t want crap like this coming at me at any given time. But this whole thing is hinging on the “request for funding” which I never made to them. And it is a big deal that people are passing off my information because, the obvious folly with Seek notwithstanding, I am very careful about who I have contacted in regards to my business plans. It wasn’t their place to, they had no authority to do so, and I’m justified in being a bit miffed over it–I don’t need your permission to be pissed off, Benny!

It didn’t take long to find a site full of complaints about DBL by people who had bought into their scheme (they try to sell you a business plan package for $3,000 or so, in installments, of course) and they couldn’t get the services they paid for or–irony of ironies–even a call back! Meanwhile, I can’t see to get these guys to stop calling me!

Thankfully, June 16th only yielded one blocked and logged call, and that seemed to be the end of it. Until yesterday, that is, when yet another dude at yet another extension called to follow up with me. Those two calls yielded ho-hum voicemails from Steve at extension 603 and Doug B at extension 629 very much like the first one.

Look, folks, there is not following up to do. I didn’t ask you to call me, I don’t want you to continue calling me (and, apparently my file contains my displeasure at your earlier calls, so no excuse there), and I’d really love it if you deleted my file and everything else about me!

Since they’ve stayed cordial, if annoying, I’ve had no reason to report them to any higher authorities–be it someone in the Dept of Corporations/Dept of State in Utah or to the FCC for any communications violations. I will continue to block their calls, continue to save and transcribe their voicemails should the status quo change. But, really, if I never heard from these guys again it would be too soon.

It’s tough to move on to the next option when bottom-feeders like DBL won’t leave you alone, but I’ll just keep blocking them and rolling my eyes as they fail to get the hint. Because I’ve got better things to do!

 

 

 

With My Mind On My Money…

Everyday Adventures

Because I’m sure no one else has used that for a budget-related post, right? Right?!

Okay, yes, it’s cliche, BUT there’s also a nugget of truth in there in that monitoring our finances (just like making our own meals) means we’ll make better choices if we’re reminded of our financial status on the regular. It may not always be a pretty picture, but hopefully it makes us want to be better.

At least that’s how it’s working for me.

Used to be I’d just write down all my bills in whatever journal I was using that year and check them off as they got paid. What was left invariably went to gas and groceries and whatever else popped up for that month. When I designed my prototype planner last year, I created a budget page to include with each month and moved my money out of my journal.

Single Page Budget Worksheet

Single Page Budget Worksheet

This worked pretty well, but it left a bit to be desired. A lot of things had to be summarized (like a single line for gas and groceries, when those are multiple per month purchases), for instance, and so I tended not to use those lines and not track my spending as much.

While a lot of people make ‘get healthier’-style resolutions, I’m more interested in getting my finances in better shape, and that means delving deeper into my spending habits and actually budgeting for certain things as opposed to just using what was there (and, let’s be honest, maybe a bit more, dipping into savings or using credit cards).

Speaking of savings, it’s never been something I’ve been great at. There’s a lot of big thinking out there about money attitudes and how much you had or didn’t have growing up. The idea that windfalls must be spent now to avoid being frittered away is a common one, or just not being able to think beyond the immediate needs. I admit that I held a lot of those attitudes over the years and am actively trying to break them/make better money associations, but that early programming is tough, you know?

On the other side of not saving enough is spending too much, as in using credit that you don’t pay off each month. I have that. A fair amount, actually, and I realized that while I do look at more than just the minimum payment line on my statement, what I tend to focus on is not the balance of credit used but the balance of available credit. Two sides of the same coin, right? Yes and no. See, while I liked seeing the ‘available credit’ increase as I paid down the balance, it gave me a skewed perspective since the important number (the statement balance) was sort of an imaginary, ignored number. It stopped having meaning. Do you do the same thing? I doubt I’m alone in this.

All of those reasons and more were why I completely revamped the budget worksheet for the 2015 Creative Days Planner. It’s now two pages, has room for the budgeted vs actual expenses for those variable spending categories, and includes balance tracker, trend, and interest columns for the debt section so that I am sure to not just look at but copy over those amounts, meaning they become more “real” to me and keep me on track to start getting them paid off, not just down!

Two-Page Budget Worksheet from the 2015 Creative Days Weekly/Monthly Planner

Two-Page Budget Worksheet from the 2015 Creative Days Weekly/Monthly Planner

The budget worksheet is something I tackle the first weekend of each month and I schedule the payments through my bank’s Bill Payer at the same time, getting as much of it out of the way at one time as possible (certain bills don’t generate until later in the month, so there’s usually a second round around the 20th. While it’s sometimes approached with a tiny bit of dread, that’s another money attitude I’ve been working on changing. Instead I remind myself that I’m grateful to be able to pay all of my bills–even the credit cards!

Is your budget something you want to get more control over this year?

Money Matters When Considering Matrimony

Third Time Wife, Wedding Planning

Continuing on in the quest to quell my initial objections to a third marriage, our respective financial status was another facet I had to come to terms with before I agreed to become Mrs from Ms.

Dollar sign casting a long shadow

image via stock.xchng | illustration by rigor789

Ages ago I heard that sex and money were the two main reasons for arguments in relationships.

For the average couple of a first-wedding age in their early-to-mid 20s, both halves of the whole are either in college, just out of or just starting those entry-level jobs. Money has more to do with making ends meet than anything else.

Fast forward to the second or third-time bride and the picture might look a little different:

  • you’ve probably been in your career for several years, maybe even gotten a promotion or three;
  • you may have some savings, a retirement plan or investments;
  • you may also have a certain amount of debt either in credit cards, a mortgage, business loans or some combination thereof.

Remarriages also mean there’s a past to be considered. Does one partner have children from a previous marriage? Aside from the step-parent duties the other may be taking on, there might be child support or alimony to figure into your future budgets.

My financial past is has a couple of significant hills and valleys. I’ve been so upside down while finishing my degree that I couldn’t pay my rent and car payment in the same month (and only a bail out from a friend kept said car from being repossessed). And I’ve also paid off all the debt I was left with after my first divorce and lived credit card-free for a few years.

I may not have completely learned my lesson last time as now I’ve got a wallet full of store and major credit cards that I was not as wise as I meant to be with. Add to that a hefty student loan and my financial picture isn’t as bright as I want it to be. I’ve put a strategy in place for paying each off, in turn and over time, but it won’t be complete before we’re married. And that bugged me since Mr. Road Trip has recently paid off all of his major debts. I really was worried that I’d be burdening him, credit-wise, were we to marry before I took care of all of that pesky consumer debt.

Things like personal credit cards generally aren’t affected by one’s marital state, I learned (unless you add your partner onto the account, that is). Student loans, however, especially if you’ve petitioned for a reduced payment based on income or hardship, do take a spouse’s income into account to some degree, but they still belong to the person who accrued the debt, not to the marriage that came after.

For this reason, and to avoid any shocking revelations in the future, it’s a good idea to sit down and have a heart-to-heart (or, should I say, checkbook-to-checkbook) discussion with your intended, just to make sure you both know what you’re getting into. This is a good time to discuss things like combining checking accounts versus keeping them separate, future big purchases and the realities thereof and how you’ll handle the household bills (and which ones could be combined) once you’re married.

Because we were already living together–and Mr. Road Trip actually had a couple periods of unemployment after he moved to Florida courtesy of those wonderful economic dips a while back–we were pretty aware of where we both stood. Still, it was worth a discussion on our part just to make sure–we all know what assuming does, right?

On the upside–two people mean two incomes (usually) and that means a better combined buying power if you do want to make a significant purchase in the future.

Was debt something that crossed your mind before saying ‘yes’?
How did you make peace with the money monster?

To Join or Not To Join?

Third Time Wife, Wedding Planning
wedding bands on a fan of $50 bills

image via stock.xchng | photography by penywise

Your checking accounts, of course.

His and hers. Yours and Mine. Ours and theirs. Money can be quite a mine-field in a relationship, especially if the two people involved have different philosophies about the management of those funds. As progressive as we’ve become these days–brides not taking the groom’s last name, the groom taking the bride’s name, offbeat weddings galore and traditions thrown out the window–joint checking seems to still be the default for newlyweds.

(Disclaimer: This is written with a definite bias against joint checking, I’m not even going to try and deny it.)

One thing that really gets me is when I hear a woman say (usually at one of those home parties or out on a shopping trip) “Oh, I’ll have to hide the statement this month!” Really? You’re going to hide your spending from your husband and you think not only is it appropriate that it’s funny as hell at the fast-one you’re pulling on him?

Oooookay.

That right there is one of the biggest downsides to joint-banking I’ve ever heard. It’s right up there with the idea of having to ask permission to spend money. In fact, having to ask permission of your spouse for anything just strikes me as a bad idea–either you’re equal partners, capable of responsible behavior or you’re not. And if you’re not, then you’ve got more to consider than just whether to combine funds once you marry.

It’s not just women that buy into this permissive spending idea, either. I’ve known couples where the woman controls the purse-strings and the man has to ask for money to go out with friends (emasculating much?). Or the guys who use direct deposit for their paychecks but get a certain amount held out as a paper check each week so they have pocket money that the wife doesn’t know about.

Does anyone else think this sort of duplicity is as backwards as I do?

When I was first married we had joint checking. One night, on the way home from a cake decorating class I stopped by Target. You see, I’d heard that Kitchen Aid mixers were on sale for $199 and I wanted one. Badly. It was late when I arrived home and my husband had already gone to bed. In fear that he’d make me take that precious mixer back I unpacked it, plugged it in, and tore up the packaging.

The mixer was a good deal and a justifiable expense–I was teaching cake decorating classes and even doing wedding cakes by that point, a hand mixer wasn’t going to cut it. The mixer is still going strong 13 years later, the marriage didn’t last another year.

So I get it, really I do, when a woman half-jokes about getting in trouble for how much she’s spending. But just because I understand it, doesn’t mean it makes sense.

Not when there are other options.

My second marriage, we kept our own checking accounts. It was, compared to previous experiences, pretty close to heaven to be responsible for how and when I spent the money I earned. Yes, we’d help each other out should something unfortunate happen and the usual budget wasn’t enough (I think maybe twice in 3 years I had to ask for help with the grocery bill), but otherwise we were pretty autonomous money-wise.

Separate accounts does bring up the question of how best to pay the household expenses. There are a few of ways to go about it and it just takes some trial and error to figure out what works best for you.

Scenario A:

Equitable distribution of payments. Say one spouse owns the home before marriage, he or she makes the mortgage payment. The other spouse, then, takes on the smaller household bills that, when totaled, equal the mortgage payment or thereabouts. They each cover personal expenses. Fairly straightforward provided both people make similar amounts of money.

Scenario B:

Also known as semi-joint checking. This involves opening up a joint account which both partners contribute to from their personal accounts. Beneficial when one person makes a significant amount more than the other. If you want to use this account for groceries and other more fluid expenses, consider keeping a fixed “buffer” amount in the account at all times. This will allow out-of-the-ordinary payments that can then be replenished afterwards without affecting the usual bill payments.

It helps to have all the accounts at the same bank, by the way; makes transfers easier.

Scenario C:

Roommates forever. You split everything household right down the middle. Used to be this was a pain, back when everyone still used checks to pay bills. With nearly every bank offering online bill pay and so many places accepting electronic payments, splitting each bill as it comes in is easy as pie.

The Road Trip thought we’d use Scenario B when we first moved in together but never really got around to it. We’ve each been saving up for the wedding expenses since a few months before officially announcing our engagement and haven’t gotten around to opening a joint account for that, either! Instead, we use Scenario C and have for several years, now, with no problems. We also take turns by week for groceries, for anyone who’s curious.

Of course, those scenarios all depend on both partners receiving a steady income of some sort. In situations where there is one income per family, joint accounts make a lot more sense and I’d never dispute that. I just think it doesn’t have to be the only way.

So, do you plan to share bank accounts when you marry?
Why or why not?