small business lending Archives

For small business owners, it’s all about keeping the faith – not only in God, but in yourself and your ability to succeed. That’s what drives Ameka Coleman, founder and CEO of Strands of Faith and one of the 3rd place winners of Kapitus’ inaugural Building Resilient Businesses contest. Strands of Faith is one of five 3rd place winners, and Coleman received $20,000 to help maintain and grow Strands of Faith.

Starting her own business in 2018 took a tremendous amount of faith, courage, and hard work for Coleman, who gave up a lucrative career as a clinical researcher for pharmaceutical contract research giant PPD to become a small business owner. The Christian mother of four took the plunge into entrepreneurship when she realized that her passion was hair care.

Coleman was able to fill a need by creating a line of cruelty-free, non-toxic hair care products that

Ameka Coleman, Strands of Faith, Building Resilient Businesses, Kapitus, Contestof Faith

Ameka Coleman, founder and CEO of Strands of Faith, used her personal credit card, a small amount of savings and her faith to launch the business.

contain no parabens or silicone-based materials, yet keep hair moisturized and healthy.

“I launched the business in 2018,” said Coleman. “Prior to this, I never thought that I would one day own a business. I was in a career, Clinical Research, that I loved. It was truly a scenario of passion meeting purpose. Starting in 2006, I developed a passion for loving and embracing my natural hair and I was equally passionate about making progress in the field of clinical trials. Eventually, my science background and real-life experience merged into one to make a beautiful faith walk with purpose!”

A Wing and a Prayer

Like most small business owners first starting out, Coleman had few resources. She used a small amount of savings and personal credit cards to fund the launch of Strands of Faith, and her biggest assets during that time were support from her family and her passion for making clean hair care products. Even though she took a huge gamble by starting her own business, she found the resilience to push through the COVID-19 pandemic through hard work.

“Building Strands of Faith has been a journey of faith, hope, and resilience,” said Coleman. “If you would have told me 6 years ago that I would one day start a business, I wouldn’t have believed it simply because I didn’t have the mental fortitude, faith, and self-confidence to bet on myself. However, little did I know, my journey leading up to it was the perfect segway to creating my brand. While I was on a journey to finding myself, it resulted in me falling in love with the hair that God blessed me with. I then found great joy in encouraging and motivating other women to do the same.”

Expansion Plans

Strands of Faith has found success through some rough times, and has grown to 10 employees and dozens of product lines, as well as a successful blog on hair care. Coleman said that she plans to use the $20,000 in prize money to help expand her team and strengthen its marketing efforts to serve customers both in the US and internationally.

“This business became bigger than me,” she said. “I was led to create products that could help further the

Strands of Faith’s Holy Grail collection of natural hair care products has helped launch it to success.

mission by providing clean products for textured hair that would make women feel confident about their hair regimen. This entire journey has been one of faith. Starting out, I didn’t have many resources, but I didn’t let that stop me. I put my best foot forward, juggled all of the roles, and trusted God to lead the way. I was working my full-time job while also being a mom to 2 kids and a wife. It was rough but the vision made me stay committed.

“Now, as a mom of 4, I strive daily to be the best example to my kids, and it gives me great joy for them to see me keep pushing along this entrepreneurial journey. Building this business has impacted my life and others in so many ways but the most impactful way has been the reminder to simply keep the faith! This grant by Kapitus is such a tremendous blessing in allowing me to expand my team and marketing efforts so that we can continue to serve women all around the world.”

Maintaining Balance

Coleman may be unusual among small business owners in that she’s achieved something that many small business owners have not: balance between her personal and business lives. Her secret is putting her family and faith first. That balance, she said, is a key part of the success of Strands of Faith.

“I did the groundwork in the beginning and worked super hard to lay a foundation, so I now have a team who has helped tremendously with taking off some of the workload. Now, these days, though the business still needs much of my time to run, my priorities have shifted, and it is all about family first! Business now comes second to my family. I intentionally did the groundwork in the beginning when my kids were younger. Now that they are older, I am super intentional about being present for them!”

Advice to New Entrepreneurs

Coleman said that the beginning days of Strands of Faith were the most difficult as they are for most small business owners, but she advised new entrepreneurs that the learning experience of launching a business is well worth it.

“I would say that the most challenging parts, in the beginning, were wearing many titles,” she said. “I now appreciate the process of first getting the experience in each role because over time it built me up to be an efficient business owner. I have learned that entrepreneurship is not just a journey by itself but, instead, it is also a personal healing journey! There will be many times where the journey may feel lonely, but this is when it becomes super important to lean on your self-confidence and focus on the past wins to get you through and, of course, God’s given strength.”

Congratulations to All the Winners

Kapitus’ inaugural BRB contest awarded $250,000 to 7 small businesses that are the epitome of strength and resilience – two crucial ingredients needed to launch and operate a small business. The first-place prize was $100,000, the second was $50,000 and five third-place winners each received $20,000. All of the winners also will receive a complimentary, 8-hour consulting/advisory session to help their business. Kapitus also looks forward to this being an annual contest starting every spring.

Learn the stories of all of our small business winners:

BRB Stories: After Devastating Setback, Play Pits Takes First Place in Kapitus’ BRB Contest!

If you’re ready to apply for a term loan for your small business, you want the terms of your loan to be as unique as your business. That said, one of the most important factors you should look at when taking on a term loan is…how long should your loan last? In the world of small businesses, the general impression has been that term loans offered by both banks and alternative lenders are typically short-term, usually with a maximum duration of 24 months.

That has changed in recent years, however, as more banks and alternative lenders, such as Kapitus, have begun offering a new option to small business borrowers – term loans extending up to 60 months. In some cases, long-term loans may offer benefits for established small businesses such as a lower fixed payment.

What Factors Should You Consider?

There are several factors to consider when determining what the duration of your loan should be. Additionally, the factors you should consider for a 60-month loan may be different than the ones you would consider for a loan that is 24 months or shorter.

Josh Jones Kapitus small business lending

Josh Jones, Kapitus’ Chief Revenue Officer, said the duration of your term loan should be a major factor when deciding to get financing.

“If you’re able to get something approved outside of two years, you have a different decision as a business owner,” said Josh Jones, Kapitus’ Chief Revenue Officer. He added that when a small business owner is considering taking a loan of 24 months or shorter, they should examine what they are using the borrowed assets for and when they expect a return on those assets.

For example, if your business is borrowing money to develop and market a new product that will be introduced to consumers in two years, then maybe a 24-month loan makes more sense for you.

“For something 24 months or shorter, you have to look at your needs, and kind of do some liability matching to what the use of the capital is and whenever it is a return is going to happen,” said Jones.

If you’re considering a 24-month loan, you should take into account the total amount that you would be paying back the lender over two years, and the fact that new debt will most likely be available to you, if needed, once you’ve paid off the loan.

“Typically, debt payment coverage based on the use of the money is a big thing,” said Jones. “Or the fact that I know I have regular needs for capital. If I know my business can support that regular payment, I may not want anything longer than 24 months because I always want an available credit limit.”

Factors to Consider When Going Long

When considering taking a loan longer than 24 months, there are several factors that you need to consider the the total cost of the loan. If you apply for a term loan that will be paid back over 60 months, for example, the total interest will be higher on that loan because the lender is taking on longevity risk – the risk that your business may not still be around in five years. After all, the average lifespan of a small business in the US is 8½ years, according to NAV.

Are you, the borrower, willing to pay more for a five-year loan than a 24-month loan? The answer to this depends on your ability to consistently make payments, and what you are using the borrowed assets for.

“With total cost, the shorter you go, the more the total cost goes down,” said Jones. “It is possible that the annual percentage rate (APR) of a 24-month loan will be more, but business owners should be more concerned about the total cost of financing, not just the APR. I’m borrowing this money, what is my total payback? If I can reduce the cost, if my business can support the payment, or my opportunity supports the payment of my debt, then that’s going to be the winning factor.”

With a longer-duration loan, you need to carefully consider:

The amount you will be paying each month. Generally, the total cost of a 60-month loan will be greater than that of a 24-month loan (of the same amount). Therefore, if you need to borrow assets, and your cash flow only allows you to pay a limited amount of debt service coverage every month, a long-term loan may make more sense since the fixed payments will be lower than a short-term loan.
Prepay Options. If you take out a 60-month loan and you want to pay it back in full in 24 months, you may have a few options in terms of the total cost of capital. Some lenders will charge you a prepay penalty by charging you the interest you would have paid had the loan gone to term. Other lenders may give you a prepay discount – they’ll discount the amount of interest you would have owed had the loan gone to term. In either case, you should carefully examine which option would be cheaper for you when you set the terms of the loan.

What Should I Use a 60-Month Loan For, and How Do I Qualify?

You can use the proceeds of a 60-month loan on anything you choose for your business, and the amount

term loan duration small business financing

Carefully consider the total cost of capital with a long-term vs. a short-term loan

taken out for a long-term loan is typically higher than a short-term one.

Generally speaking, proceeds for a long-term loan are usually spent on permanent assets for your business, which could include the purchase of property, office equipment, office furniture, computers and company vehicles. Perhaps you need a long-term loan to acquire a well-established business to complement your own.

Be aware that the requirements and underwriting process for obtaining a loan beyond 24 months are more stringent than a standard two-year loan, mainly because the lender is taking on that longevity risk.

“Even if you have a great credit score, it can be very difficult for a business to get a 60-month loan unless they have [many] years in business,” said Jones. “That’s because the likelihood of a business [that’s well established] making it another five years is much higher than a business that’s shorter. It’s not meant to be insulting to anyone’s good business, it’s just the way the stats play out.”

Talk to Your Financing Specialist

The duration of your term loan will depend on several different factors; but, like with most loans, your ability to pay the loan back will usually be the key. Examine your balance sheet and cash flow history, and talk to the financing specialist about whether lower payments over a longer time horizon may be a better option for your business.

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