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Small Business Health Check Test

  • Updated on January 6, 2025
  • Category: Uncategorized
NEWITY LLC and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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How Much Does a Business Loan Cost

How Much Does a Business Loan Cost

The rate on your loan offer is not the total cost you’ll pay. Two lenders can quote the same rate and hand you completely different bills.

A business loan’s real cost comes from four things stacking on top of each other: the rate itself, the fees layered onto it, the payback term, and how the payment schedule lines up with your cash flow. Miss any one of those, and the “cheap” loan can turn out to be the expensive one.

This guide breaks down each piece — what typically drives the cost up, what’s actually normal versus padding, and what loans through NEWITY do differently.
What Actually Determines How Much a Business Loan Costs?
Four variables determine the real cost of a business loan: the interest rate (or factor rate), the fees charged on top of it, the term length, and the repayment structure.

Rate: This is the number lenders advertise, and the one most likely to mislead on its own. Here’s why:
  • A 7% rate with no fees can cost less overall than a 5.5% rate loaded with fees.
  • “Rate” doesn’t always mean the same kind of math: an interest rate charges you for the time you owe money. A factor rate — common on merchant cash advances and some short-term loans — charges a fixed amount no matter how fast you pay it back.
Fees: These are extra costs in addition to the interest you’ll pay. Every fee is either deducted from what you receive or added to what you repay. These fees can include application fees, origination fees, closing fees, and more. Keep reading to learn more about common term loan fees.

Term length: A longer term lowers your monthly payment, but can raise your total interest paid. A shorter term means lower interest paid in the long run, but can cripple your monthly cash flow.

Repayment structure: A loan repaid monthly behaves very differently in your cash flow than one repaid weekly or daily. This is where a “cheaper” loan can hurt even more — see the cash flow section below.

None of these four variables show up in a single number. That’s exactly why rate alone is such an unreliable way to compare offers.
Why Is My Business Loan More Expensive Than the Rate…
The Merchant Cash Advance Trap: Why Fast Cash Can Cost You Your Business

The Merchant Cash Advance Trap: Why Fast Cash...

Every small business owner hits a moment where the bank account is thin, but the business needs to keep moving forward.

That’s exactly the moment a merchant cash advance (MCA) shows up in your inbox, promising money in your account by tomorrow.

Here’s what MCAs actually are, why they’re so tempting, why they can quietly wreck a business, and what to look at instead.
What Is a Merchant Cash Advance?
An MCA isn’t a loan. That distinction matters more than it sounds like it should.

Legally, an MCA provider is buying a slice of your future sales at a discount, not lending you money — which is exactly why MCAs have historically sidestepped the usury caps and licensing rules that govern traditional lenders.

Here’s the mechanic: you get a lump sum upfront. In exchange, the provider takes a cut of your daily (sometimes weekly) credit card and debit card sales, or debits a fixed amount straight from your bank account, until you’ve paid back the advance plus their fee.

Approval usually hinges on your recent card-swipe volume, not your credit score or years in business.
Why Business Owners Choose MCAs
MCAs sell speed and access:

  • Funding in 48-72 hours. No multi-week underwriting cycle.
  • Credit score isn’t the gatekeeper. If your card sales are healthy, you can often qualify even with a bruised credit history or a young business.
  • Almost no paperwork. This can seem enticing to a borrower looking for quick and easy funding.
  • Flexible-feeling repayment. Because the holdback is tied to sales volume, it can feel like it breathes with your business — slower in a slow month, faster in a strong one.
For a business staring down a broken piece of equipment, a payroll gap, or a time-sensitive inventory purchase, that pitch is hard to say no to.
Why It's a Trap for…
Hard Pull vs. Soft Pull: What's the Difference Between These Credit Checks?

Hard Pull vs. Soft Pull: What's the Difference...

Not every credit check is created equal.

Some quietly check your credit in the background and leave your score untouched. Others show up on your credit report, can shave points off your score, and stay visible for years.

Let’s break down the difference and what to look for when researching funding.
What Is a Hard Pull (Hard Inquiry)
A hard pull — or hard inquiry — commonly happens when you formally apply for credit and give a lender permission to review your full credit history to make a lending decision. This type of credit pull will impact your credit score.

Common instances of hard pulls:
  • Applying for a credit card
  • Applying for an auto loan or mortgage
  • Applying for a personal loan
  • Applying for a business loan that requires a personal guarantee
  • Requesting a credit limit increase (in some cases)
  • Signing a lease that requires a credit check
Hard inquiries are visible to other lenders who pull your credit report. Per Experian, too many of them in a short window can make you look like a higher risk, even if each individual inquiry only costs you a few points.

At NEWITY, we never perform a hard credit pull at any point in the loan process.
What Is a Soft Pull (Soft Inquiry)
A soft pull — also called a soft inquiry — is a credit check that does not affect your score.

Common instances for soft pulls:
  • Checking your own credit score or report
  • Pre-qualification or “see if you’re likely to be approved” tools
  • An existing lender or credit card issuer reviewing your account
  • Employer background checks (with your authorization)
  • Insurance quotes
  • Promotional or prescreened credit card offers you didn’t apply for
Soft pulls are invisible to other lenders. You can rack up as many as you want without any effect on your credit score, which is exactly why prequalification tools that use soft pulls have become popular for loan and credit card shopping.
Hard Pull…
When Should I Get a Small Business Loan?

When Should I Get a Small Business Loan?

The mistake most entrepreneurs make when considering small business funding is waiting until the need for capital is dire.

Insufficient cash flow to make payroll, falling behind against competition, supplier deals falling apart because you can’t front the inventory cost, or deciding to slow your business’s natural growth trajectory because you don’t have the capital to back it.

By the time that pressure builds, the borrowing window has usually narrowed and the available terms tend to be less favorable.

We want to help small business owners take a more strategic, proactive approach to funding. NEWITY makes it simpler and faster to access SBA 7(a) loans and other financing options.

Let’s go over some evidence-backed scenarios where a small business loan makes the most sense, the situations where you should hold off, and a quick self-check to help you figure out where you stand.
Timing
The most successful businesses look at financing as a standard operating tool, as opposed to a last resort.

According to the Federal Reserve Banks’ 2026 Report on Employer Firms, 86% of small employer firms use financing on a regular basis, and 60% applied for financing in the prior 12 months. The most common reasons: to meet operating expenses (56%) and to pursue expansion or a new opportunity (46%).

This is using funding as a strategy rather than an emergency safety net.
6 Situations in Which a Small Business Loan is The Right Move 1. You Have a Clear Growth…
AI for Small Businesses

AI for Small Businesses

Small businesses using AI are reporting in increase in revenue. Here's how you can join them.
SBA International Trade Loans (ITL): Grocery Guarantee and Made in America

SBA International Trade Loans (ITL): Grocery Guarantee and...

Key Takeaways
  • The SBA expanded its International Trade Loan (ITL) program in May 2026 with two new initiatives — the Made in America Loan and the Grocery Guarantee Loan — offering up to $1M in working capital with a 90% federal guarantee, 15 percentage points higher than the standard SBA 7(a) program.
  • U.S. manufacturers under NAICS Sectors 31, 32, and 33 can now access up to $1M in long-term SBA-backed working capital through the Made in America Loan to fund reshoring, equipment upgrades, supply chain diversification, and domestic workforce expansion.
  • Agriculture, food retail, food processing, and food distribution businesses can now qualify for SBA financing through the Grocery Guarantee Loan — a historic shift that previously directed these businesses to USDA programs with significantly lower loan limits.
  • Both programs require a 600+ FICO score, $100K+ in annual revenue, and 2–3 years in business, with loan sizing based on DSCR or 35% of annual revenue, and repayment terms up to 10 years at WSJ Prime + 3.00%.
The SBA just expanded its International Trade Loan (ITL) program with two targeted initiatives: one for manufacturers and one for the food supply chain.

Here’s what you need to know.
01 — The SBA ITL: A Foundation for Growth
The ITL has long been a powerful tool in the SBA’s lending portfolio and these two new programs will further contribute to that.

The ITL was originally designed for one purpose: to help small businesses compete in a global economy. Whether a company was expanding into export markets or had been hurt by foreign competition, the ITL gave lenders the confidence to back them with a 90% SBA guarantee.

That guarantee is key.

It means the SBA covers up to 90 cents of every dollar if a loan defaults, dramatically lowering the risk for lenders and, in turn, making capital more accessible for borrowers.

For context, the SBA’s flagship 7(a) loan program carries a standard guarantee of 75%. The ITL’s 90% guarantee puts it in a different category with a stronger backstop, more lender confidence, and better odds of approval for businesses that might otherwise struggle to qualify.

Eligible uses under the ITL have always been broad: acquiring or upgrading U.S.-based facilities and equipment used in trade, bringing production back to American soil, working capital needs, and refinancing existing business debt on unreasonable terms.

Repayment terms stretch up to 25 years for real estate and 10 years for working capital, far longer than most conventional business loans.

Why the 90% guarantee matters to you: A higher federal guarantee means lenders take on less risk. This translates to broader approval rates, more favorable terms, and more willingness to lend to businesses in capital-intensive industries that traditional banks might hesitate on.

For years, the ITL remained a niche product, mostly used by exporters and import-competing manufacturers who could directly tie their loan purpose to international trade. That’s changing in a big way in 2026.
02 — How the New…
What Is Working Capital? A Small Business Owner's Complete Guide to Getting the Funding You Need

What Is Working Capital? A Small Business Owner's...

Key Takeaways
  • Working capital is your business’s financial breathing room, calculated as current assets minus current liabilities, it covers day-to-day expenses like payroll, inventory, and rent
  • The SBA defines working capital more narrowly than standard accounting— SBA loans designated for working capital can only be used for operating costs like rent, payroll, insurance, and professional fees, not equipment or real estate
  • Lenders focus primarily on your DSCR (Debt Service Coverage Ratio), not just your working capital balance
  • A DSCR of at least 1.1–1.25 is typically required, as it shows that your business generates enough cash flow to cover all debt
  • Insufficient cash flow (especially for seasonal businesses) can force you to miss bulk purchase deals, turn down large orders, or fail to seize growth opportunities, even if your business is technically profitable
  • SBA term loans offer the best rates and longest terms but take longer to fund, while lines of credit and short-term loans offer more speed but at higher costs or shorter repayment windows.
  • NEWITY funds SBA loans three times faster than the national average so you don’t have to trade quality for efficiency
The Cash That Keeps Your Business Running
You’ve got customers. You’ve got revenue. You’ve got a business you’ve worked hard to build.

But you’ve also got payroll due Friday, a supplier invoice that can’t wait, and a slow month sitting between you and that next big order.

That gap between what’s coming in and what’s going out is a working capital problem.

Rising costs and uneven cash flow were in the top three financial challenges for small businesses in 2024, and 65% of small business owners who were approved for financing were doing so specifically to cover working capital needs.

If you’re in a similar position, you have more options than you might think.

This guide will walk you through exactly what working capital means, why it matters, how lenders (including the SBA) look at it, and how a small business loan can help you get more of it.
What Is Working Capital?
Working capital is the money your business has available to cover its day-to-day operating expenses and short-term financial obligations.

Think of it as your financial breathing room. It’s what lets you pay your employees this week, keep the lights on, restock inventory before a busy season, and cover an unexpected repair, all without dipping into personal savings or putting the business at risk.
Working Capital =…
Calculate and Improve Your DSCR

Calculate and Improve Your DSCR

Key Takeaways
  • The Debt Service Coverage Ratio (DSCR) shows how easily a business can pay its debt obligations from its operating cash flow.
  • The SBA requires a minimum of a 1.1 DSCR for SBA 7(a) loans under $350k
  • To calculate DSCR, you need financial statements to find operating cash flow (typically EBITDA), total all annual loan principal and interest payments, then divide cash flow by that total.
Your business’s Debt Service Coverage Ratio (DSCR) is a number that helps gauge your ability to cover your debt payments and reflects how much free cash flow you have left after covering all necessary expenses.

DSCR tells lenders whether your business generates enough cash flow to comfortably make its debt payments, and recent SBA rule changes make it even more central to how SBA 7(a) loans are approved.
What Is DSCR
DSCR measures how many dollars of operating cash flow you have for every dollar of annual loan payments (principal + interest).
  • Formula: DSCR = Operating Cash Flow ÷ Annual Debt Service.
  • If DSCR = 1.00, you have just enough cash to make your payments, with no cushion.
  • If DSCR = 1.25, you have 25% more cash flow than needed for debt payments (a healthy buffer).
  • If DSCR < 1.00, your business does not generate enough cash to cover all required loan payments.
The higher your DSCR, the better your cash flow.
New SBA SOPs
Recent updates to SBA’s rules and regulations tightened how lenders must underwrite SBA 7(a) under $350k and DSCR is now explicitly front and center.

For SBA 7(a) loans up to $350,000, the SBA now requires that the borrower’s DSCR be at least 1.10 based on historical cash flow.

These SOP changes signal that lenders must put cash flow—not just credit scores or collateral—at the center of their decision.

The SBA explicitly requires lenders to document “repayment ability” using DSCR and detailed cash flow analysis, rather than leaning on scoring models.
How to Calculate Your DSCR
  • Whether you’re applying, uploading documents, or waiting on underwriting, our Member Services team is your go-to team for help, updates, and escalation.
  • Our team is always implementing new tech and strategies to be as accessible to our members as possible
At NEWITY, we walk our members through the entire loan process and beyond, helping them secure the resources they need for their small business to flourish.

We know that navigating small business financing can feel overwhelming. That’s why our Member Services team is built to be more than just a help desk. They’re your bridge to answers, your advocates, and your guides through every step of the funding journey.
How can Member Services support you and your business?
Our Member Services team strives to be as accessible as possible, answering your questions and solving problems with efficiency and effectiveness.

This means offering support for:
Login & Account Access
  • Trouble signing in
  • Resetting passwords
  • Navigating your account
Application Support
  • Help completing your SBA 7(a) loan application
  • Clarifying document requirements
  • Troubleshooting upload errors
Status Updates
  • Checking where your application stands
  • Following up if you haven’t heard from your underwriter
  • Escalating issues when needed
Helping Members Move…
How To File For Tariff Refunds

How To File For Tariff Refunds

Key Takeaways
  • The Supreme Court has ruled Trump’s IEEPA tariffs unlawful
  • This ruling opens the door for many businesses to get refunded for IEEPA tariffs they paid directly on imports
  • In order to be eligible for your money back, your business must have been the Importer of Record
  • The CBP is developing a dedicated administrative refund process in its Automated Commercial Environment (ACE) system under the supervision of the U.S. Court of International Trade (CIT). 
  • Read our breakdown on how small business owners can collect the necessary information and documentation to officially request their refund
It is estimated that the direct annual tariff cost to U.S. small businesses was between $85 billion and $99.6 billion.

From April to September of 2025, roughly 236,000 small business importers in the U.S. paid an average of $151,000 more in tariffs compared to the same period in 2024.
Supreme Court Tariff Ruling
On Friday February 20, the Supreme Court released a decision condemning the Trump administration’s sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA).

This 1977 Act gives the president authority to broadly manage U.S. economic transactions with other countries after declaring a national emergency.

President Trump evoked the IEEPA to set tariffs on virtually every country the U.S. trades with, citing a U.S. trade deficit and the flow of fentanyl and undocumented immigrants across the southern border as the “national emergencies” justifying his tariffs.

This was the first time in history that a U.S. president attempts to use the IEEPA to enact tariffs.

The Supreme Court majority held that the IEEPA is not an act that gives unchecked authority to the president to unilaterally impose tariffs.
What Changes With This Ruling?
The Supreme Court striking down Trump’s IEEPA tariffs means the termination of:
  • The 10% baseline “reciprocal” tariff on nearly every country in the world
  • The higher country-specific reciprocal tariffs targeting countries like China, Vietnam, and EU members
  • The fentanyl and drug-trafficking emergency tariffs on Mexico, Canada, and China
  • Critically, the ruling extends to all IEEPA tariffs categorically — not just specific rates or countries. The Court found the fundamental legal defect was that IEEPA is simply not a tariff statute at all
The Court’s decision did not strike down:
  • Section 301 tariffs on China (authorized under a different trade law)
  • Section 232 tariffs on steel and aluminum (authorized under a different national security law)
  • Any tariffs properly authorized by Congress through explicit legislation
Notably, only tariffs under the IEEPA were struck down, not all Trump-era tariffs.
What Does This…
How To Choose a Small Business Loan

How To Choose a Small Business Loan

Key Takeaways
  • Small business loans through traditional banks have become less accessible and affordable
  • Some financial institutions are introducing AI into their lending processes, making small business lending more efficient and less expensive
  • Small business owners should apply for funding proactively rather than waiting until their need for capital is dire
  • When searching for a loan, entrepreneurs should research interest rates, repayment term lengths, down payment requirements, collateral requirements, and how the actual loan processing will be conducted in order to make the best decision for their business

Searching for funding that works for your business is no small feat, and not all funding is created equal.

A market saturated with a variety of loan types and providers means discerning the best option for your business requires time and careful consideration.

If you’re strategic about your business funding then managing your repayment and balancing your books should not be overly taxing on your cash flow.

Small Business Loans Through a Traditional Bank
Over the last decade, banks have begun moving away from providing small business funding. Due to the high failure rate of small businesses, banks are less partial to assuming the risk of funding small businesses.

Additionally, small businesses are often seeking less than $500k in funding. These loans are considered “small balance” and the cost of processing them often does not outweigh their profit for banks.

Many banks are still using traditional, manual processes to approve, underwrite, and fund loans.

If a small business is approved for funding through a bank, getting the funding takes time and qualification requirements will be stricter due to the high-risk status of small business lending.
What Are Some Alternatives To Traditional Bank Loans?
  • Small businesses on average receive funding at less than half the rate of larger enterprises
  • Traditional banks cannot justify the cost of funding small-balance (<$500k) loans 
  • The integration of AI into small business lending makes the loan process quicker and less expensive
  • AI does not make loan approval decisions, nor does it set loan terms
  • Real humans are still just as important to the lending process as they were before AI
The Small Business Lending Problem
Small businesses on average receive funding at less than half the rate of larger enterprises. Nearly half of all businesses do not receive the funding they’re seeking.

This disparity underscores a critical challenge in the small business lending landscape.

The Boston Consulting Group estimates that the funding gap between small businesses and larger enterprises ranges from $350 billion to $750 billion.

But why?

Small businesses often need small balance loans, with common requests of capital totaling under $500k.

Given the amount of time and energy that goes into the assessment and underwriting of any business loan, the fees collected from a loan that size often do not cover the cost it would require to underwrite it.

If these loans are approved by a traditional bank, the excessive amount of time needed to underwrite them is not time that small business owners can afford.

Further, offsetting these underwriting costs most likely looks like heightened interest rates and shorter repayment terms for small businesses.

Securing small business capital through traditional banks is only growing more expensive and less accessible.
How Can AI Solve This
The integration of AI into small business lending is an opportunity to bring the capital to small businesses that traditional bank processes cannot— and much more rapidly at that.

But what exactly is the AI doing in this process?

The most crucial point to note is that AI is not making decisions about loan approval. A small business owner’s loan approval and interest rate is determined by real humans. However, AI plays a pivotal role in streamlining the behind-the-scenes work.

AI systems are adept at aggregating data from various documents, distilling key information, and organizing insights. This automation frees underwriters to focus their energy on making smart, data-backed assessments about borrowers’ financial health.
How Does AI Help…
QBI Deductions— What Are They? Does Your Business Qualify?

QBI Deductions— What Are They? Does Your Business...

Key Takeaways
  • A QBI allows eligible businesses to deduct up to 20% of their business’s qualified income from their taxes, allowing them to secure a refund from quarterly payments
  • Certain business types and industries are excluded from QBI deduction eligibility
  • Individuals filing jointly must have a taxable income below $394,600 for 2025
  • Individuals filing separately must have a taxable income below $197,300 for 2025
  • Business owners can strategically position themselves to qualify for a QBI deduction next tax season
What Is A QBI Deduction?
A Qualified Business Income (QBI) deduction allows certain eligible businesses to deduct up to 20% of their business’s net qualified income from their taxes.

This qualified income is determined by key factors pertaining to your business’s functions, industry, and total income.
Who Can Claim QBI Deductions
QBI deductions are available to the following business types:
  • Sole Proprietorship
  • Partnership
  • LLC that files as an S-Corp, Partnership, or Sole Proprietorship
  • S-Corporation
Businesses considered Specialized Service Trade Businesses (SSTB) have specific QBI requirements. Businesses in the following industries are considered SSTBs:
  • Health
  • Law
  • Accounting
  • Consulting
  • Athletics
  • Finance
Read further for more details on what this designation means for your potential QBI deduction.
Overall Taxable Income
  • Ensure you know your EIN number and your business’s entity type in order to identify your payment and filing requirements
  • This article lists the dates returns are due based on your business’s use of the calendar or fiscal year
  • Regardless of filing dates, most small businesses should be making quarterly tax payments
  • You can choose to apply for a filing extension based on your business structure’s respective extension request due date
  • Ensure you review our list of possible tax deductions for your small business
  • Small businesses with employees have additionally filing and payment requirements
Most people commonly associate “tax season” with the springtime.

However, tax organization is an ongoing process requiring year-round maintenance and organization.

From making quarterly payments, to keeping your filing information organized, to knowing how your specific business is expected to file and when, it’s crucial that all small business owners are acutely aware of how they should be paying and filing their small business’s taxes.

Here is everything you as a small business owner should know about filing taxes for your business.
How To File
First, ensure that you’ve confirmed the basics of tax filing.
Find Your Employer Identification Number (EIN)
Your EIN number helps to identify your business for tax purposes at both the state and federal level. Similar to your own Social Security Number, this number is essential for operating your business.

If you’re a new business, you can apply for free and receive an EIN through the IRS.
Confirm Your Business's…
The Grove Tavern— Hometown Friends Turned Business Partners

The Grove Tavern— Hometown Friends Turned Business Partners

Erected in the center of DeKalb, IL from nothing but a concrete slab stands The Grove Tavern.

Owned by born-and-raised DeKalb natives, at the heart of this small business is a hometown legacy.
“The rewarding part is, a lot of people saw us grow up here,” said Sam Patterson, co-owner of The Grove. “These people babysat us, were our teachers, saw us graduate from DeKalb High School; especially for the class clowns always goofing off in school the whole time, they’re probably thinking ‘Ok, they really did something here.’”

In the late 1800s, DeKalb was known as “Huntley’s Grove.” Now, this former town name is The Grove Tavern’s namesake.

A “grove” in nature is a group of trees that can often function as a safe haven for a diverse array of animals, providing protection, sustenance, and respite.

This is effectively what Patterson and his team created in their tavern.

The open, commodious dining area is juxtaposed by warm, dim lighting and dark wood accents to bring a touch of tranquility and comfort to the vast space.

Patterson cites the customer experience as the ultimate driving force of The Grove’s growth path.

“The customers are obviously everything,” he said. “They’ve helped us navigate what the community wants, and we try to make sure we have a little bit of something for everybody while not sacrificing our true mantra: Good food, all scratch made.”

That’s the small business balancing act, pursuit of an authentic vision whilst doing justice to the community you’re serving.

Prior to starting The Grove, Patterson lived in Chicago for ten years working in corporate real estate. 

“That was always my main focus, but I always knew there was something more out there,” he said. “And when you’re good at what you do, it kind of sucks to be making the money for someone else.”
In 2020, Patterson looked at purchasing an already-existing restaurant. When that didn’t come to fruition, he and his team turned their attention to building a small business from the ground up.

“We took this blank space and we did the whole build out ourselves,” Patterson said. “It was a cement floor, that was all we had. No walls, nothing.”

As the dream of The Grove became reality, the team of owners began looking for growth capital to propel them forward.

“Every restaurant is going to need a little extra money,” Patterson said. “Between the build out, payroll, a little debt refinancing, there are a lot of things working against you up front.”

First, the team considered a “traditional” financing route.

“You’d think you’d go right down the street, go to your local bank and they’d be open arms, but it really was not that,” Patterson said. “They wanted us to put a bunch up for collateral, and rates were high, and it just didn’t make sense.”

That’s when The Grove team found NEWITY.
“Good rates, good terms, good amount of money,” Patterson said. “And I was almost shocked at how easy it was. We were organized, so you guys were matching us on the speed at which things could get done.”
Patterson said he doesn’t think that will be the last time he applies for growth capital through NEWITY.

“I think now that we have the chef we’ve always wanted and he’s here for the ride, hopefully we can expand and maybe go East,” Patterson said. “Maybe try a different type of restaurant.”

But despite all their previous success and impending growth, Patterson and the rest of the team at The Grove continue to stay true to the foundation they were built on.

“My family, we didn’t come from money,” Patterson said. “You put in the time, learn as much as you can from other people, and then translate that into doing your own thing.”

When Patterson was asked what his advice to other entrepreneurs would be, he spoke of embracing humility as a foundation for ultimate learning, growth, and achievement.
“Work at a restaurant. Work the back of the house, front of the house, everywhere you can. Get yourself exposed to it,” Patterson said. “Build a base knowledge of the industry you’re looking to get into and have the support around you.”
The Grove’s core team is a hodge-podge mix of finance minds, business-savvy entrepreneurs, and restauranteurs with hands-on industry experience.

This amalgamation of diverse experiences, working in tandem with their commitment to listening to their community, allowed these owners to come together to build something true and lasting.
As 2025 comes to a close, NEWITY is proud to reflect on a year defined by innovation, expansion, and unwavering commitment to small businesses across the nation.

From industry recognition to member milestones, we’re proud of what we’ve built this year.
Our Community Grew Stronger
This year, 322,103 new members joined the NEWITY network, expanding our vibrant community of entrepreneurs and small business owners.

Every new member represents a story of ambition and resilience, and we’re honored to be part of their journey.
Fueling Growth
  • Start by organizing all your accounts, clearly indicating how much you owe, to whom, and by when.
  • Consider various strategies to reduce your debt, such as avalanche pay-off and refinancing 
  • If you are going to refinance with an SBA 7(a) loan, ensure you’re aware of what types of debt can and cannot be refinanced with an SBA loan
Why Debt Management Matters
Entrepreneurs go into debt for lots of reasons— taking out loans to fuel a new project, using credit to bridge slow seasons, or even taking out start-up capital to kickstart a new business.

Because of this, debt isn’t inherently “bad.” As long as you’re strategic about when you take on new debt and what kind of debt you take on, borrowing money helps propel your business to new heights and bring your vision to life.

That said, ensure you are properly assessing your borrowing options as well as considering your repayment plan prior to applying for additional debt. This will ensure you have a plan in place that works for your business’s growth.

Debt organization helps you not only keep up with your repayment plan, but also helps you maintain and improve your SBSS score, avoid late payment fees, and take advantage of refinancing and consolidation opportunities.

Additionally, having an awareness of your debt holdings and potential options for decreasing your payments can help you assess options for more funding in the future, as your existing debt does affect how you qualify for additional loans.
Understanding Your Business Debt
Managing debt effectively starts with knowing exactly what you owe and to whom. It may seem trivial, but this preliminary basic organization can go a long way in keeping you up to date and aware of your debt holdings throughout the life of each repayment plan.
Know Exactly What You Have
  • Get festive with your online presence, sharing holiday-themed posts and drawing attention to your holiday season deals
  • Consider expanding your hours to cater to shoppers on a tight schedule
  • Ensure all the information about your business is up to date on every website and platform
  • Offer gift cards for indecisive shoppers to not only draw immediate revenue, but also expand your customer base
  • Be sure to support your employees throughout the season and show your appreciation

The holiday season is huge for small businesses. According to the National Retail Federation, holiday sales in November and December regularly account for 20% or more of annual retail revenue, with U.S. consumers spending over $950 billion in 2023 alone.


For many small businesses, this period can make or break the year. But success doesn’t happen by chance. It requires strategic planning and smart execution.


If you’re a small business owner, now is the time to position your brand to capture holiday shoppers’ attention, maximize sales, and build lasting customer relationships.


Here are five actionable strategies to help you prepare and take full advantage of the season.

1. Leverage Social Media to Spark Holiday Engagement
Social media is your holiday megaphone. Platforms like Instagram, Facebook, TikTok, and LinkedIn are where customers discover gift ideas, seasonal promotions, and local businesses.

Here’s how to make the most of it:
  • Create Holiday-Themed Content: Showcase your products in festive settings, share behind-the-scenes videos of your team preparing for the holidays, and post gift guides tailored to different budgets or interests.
  • Run Interactive Campaigns: Polls, contests, and giveaways can boost engagement and attract new followers. For example, a “12 Days of Giveaways” campaign can keep your audience coming back daily.
  • Use Paid Ads Strategically: Even a modest ad spend can amplify your reach. Target local audiences or people searching for holiday gifts in your niche.
  • Schedule Posts in Advance: Use social media organization tools to plan content so you can focus on in-store or operational needs during the busiest weeks.
Social media isn’t just about establishing credibility; it’s about creating a sense of excitement and urgency that drives customers to act.
2. Expand Your Hours
  • Factors like your revenue, credit, debt, and business age all impact the funding you qualify for 
  • Paying down existing debt, opening credit building accounts, and getting strategic about your financial tracking can help you increase your approved loan amount
  • Consider the timing of when you apply— slow seasons, unpaid client invoices, and the age of your business at the time of application can impact your loan size 
  • Choose to apply for a loan through a group dedicated to making the process efficient, affordable, and accessible 
Your SBA 7(a) loan application was preapproved, but not for the amount you had hoped to receive. If you still have your sights set on that higher loan amount, there are steps you can take towards improving your eligibility.

When it comes to increasing your loan size, it’s important to understand what factors play a role in your qualification. Taking strides to make changes to your application can positively impact the amount you’re qualified to receive.
What Factors Determine an SBA 7(a) Loan Amount? Revenue
Proving you have sufficient cash flow to take on loan payments is extremely important.

Consider this calculation:
  • Calculate your business’s average annual revenue for the last 3 years, if applicable
  • Subtract any existing debt you currently hold
  • Find 25%-50% of that number; that is your ideal loan request range
Using the 25%-50% range you just calculated is a good start for deciding how much you want to request in an SBA 7(a) Loan Application. You should not be applying for a loan that is over half of your average annual revenue. This target not only helps you to manage your debt wisely, but lenders and facilitators like NEWITY will be performing similar calculations to determine whether you’ll receive approval for your requested loan amount.
Credit
While traditional FICO scores are not the ultimate determination when it comes to qualifying for an SBA 7(a) loan, creditworthiness is still a key part of the evaluation process.

Instead of relying solely on personal credit scores for SBA loan eligibility, NEWITY uses the SBA’s SBSS scoring model. Unlike individual credit scores, SBSS scores incorporate business and personal credit criteria to evaluate creditworthiness of SBA 7(a) loan applicants.

Indicators of a sufficient SBSS score include having at least two years in business, annual revenue of $100,000 or more, and maintaining a healthy cash balance— ideally enough to cover several months of loan payments. These factors help demonstrate your business’s ability to repay the loan and manage its finances responsibly.
Debt…
4 Metrics To Track Your Business's Financials

4 Metrics To Track Your Business's Financials

Key Takeaways
  • Gross Margin shows how efficiently your business is producing and selling its products or services. 
  • Customer Concentration is a way to assess how dependent your business is on a small number of clients.
  • Aging of Accounts Receivable shows how quickly customers are paying you.
  • Cash Needs reflects the amount of cash your business needs to run on a monthly basis.

Running a small business requires juggling a variety of responsibilities, so sometimes detailed financial tracking gets pushed to the wayside.

When serving customers and running daily operations demands most of your time, taking a step back to look at the bigger picture of your small business’s performance and growth is not a simple task.

Where do you start? What should you be looking for?

Let’s break down the 4 most important key performance indicators (KPIs) for you to keep an eye on.

Carving out just a few minutes each month to track these 4 metrics can make a significant difference in how you steer your business forward.

These KPIs offer a snapshot of your business’s financial health and can help you make smarter, faster decisions.

Why Metrics Matter
Half the battle is identifying objective metrics by which you track your business’s performance. Once you know exactly what to look for, you’ll have insights that:
  • Identify strengths and weaknesses in your business model
  • Spot trends before they become problems
  • Make informed decisions about pricing, staffing, and inventory
  • Communicate more effectively with lenders, investors, and partners
While every business is unique, the following four metrics are foundational for most industries, especially for B2B companies and service-based businesses.
Gross Margin
Gross margin represents the percentage of revenue that exceeds the cost of goods sold (COGS). It shows how efficiently your business is producing and selling its products or services.

How To Calculate It

Gross Margin (%) = (revenue-cost of goods sold)/revenue × 100

Example

If you sell a product for $100 and it costs $40 to produce, your gross margin is:

($100−$40)/$100×100= 60%

This means you retain 60 cents for every dollar of sales, before accounting for overhead and other expenses.

Pro Tip

Track gross margin by product line or service category. This allows you to double down on high-margin offerings and reevaluate or reprice low-margin ones.
Customer Concentration
Customer concentration measures how much of your revenue comes from your largest customers. It’s a way to assess how dependent your business is on a small number of clients.

Why It’s Important

High customer concentration can be risky. If one major client stops doing business with you, it could significantly impact your revenue and cash flow. Monitoring this metric helps you:
  • Diversify your customer base
  • Reduce dependency on any single client
  • Strengthen your long-term financial stability
How To Calculate It

Customer Concentration (%) = amount of revenue from top customers / total revenue × 100

Example

If your top customer brought in $90,000 and your total revenue was $200,000, your customer concentration is:

($90,000/$200,000)×100= 45%

This means 45% of your revenue is coming from just one client, indicating you may want to expand your customer base.

Pro Tip

Aim to keep any single customer below 20–30% of your total revenue. If that’s not possible, consider strategies to expand your customer base or offer new services to existing clients to reduce risk.
Aging…
Small Business Bookkeeping

Small Business Bookkeeping

Key Takeaways
  • Bookkeeping includes functions like transaction recording, account management, payroll processing, reporting, and more
  • There are 5 account categories for sorting transactions: assets, liabilities, equity, revenue & income, and expenses
  • There are different approaches your can take to bookkeeping: cash-based vs. accrual-bases and single-entry vs. double-entry
  • The three financial statements most commonly used in bookkeeping includes an income statement, balance sheet, and chart of accounts
  • Doing your own bookkeeping includes 4 main functions: sorting transactions, recording journal entries, posting to a ledger account, and adjusting entries as needed
Why Is Bookkeeping Important?

Bookkeeping is the process of recording, organizing, and tracking your business’s finances. This is the foundation of your small business’s growth and prosperity.

Having an acute awareness of the cash that’s flowing in and out of your business and what services and expenditures are driving that flow helps you not only maintain good financial standing, but also helps you take advantage of growth opportunities and proactively combat financial struggle.

Bookkeeping helps you stay financially organized, but it also aids in staying tax compliant. The IRS requires you to keep records of information pertaining to your small business’s receipts, purchases, expenses, assets, travel, employment, and more.

Additionally, when you apply for small business funding, you’ll need to submit relevant financial documentation. Having an awareness of your small business’s cash flow can also help you to determine the loan size you could qualify to receive and gauge the amount of debt you’re willing to take on.

What Is Bookkeeping?
Bookkeeping involves a variety of different functions, depending on your business’s operations.

Financial Transaction Recording
  • Sales and Revenue Tracking: Recording income from products or services
  • Expense Tracking: Logging purchases, bills, and operational costs
  • Cash Flow Monitoring: Keeping tabs on money coming in and going out
Account Management
  • Accounts Receivable: Tracking customer invoices and payments
  • Accounts Payable: Managing bills and payments to vendors or suppliers
  • Bank Reconciliation: Matching internal records with bank statements to ensure accuracy
Payroll Processing
  • Calculating employee wages
  • Withholding taxes and benefits
  • Issuing payments and maintaining payroll records
Financial Reporting
  • Profit and Loss Statement (P&L): Showing income vs. expenses over time
  • Balance Sheet: Displaying assets, liabilities, and equity
  • Cash Flow Statement: Highlighting how cash moves through the business
Tax Preparation and Compliance
  • Organizing records for tax filing
  • Tracking deductible expenses
  • Ensuring compliance with federal, state, and local tax laws
Budgeting and Forecasting
  • Creating financial plans based on historical data
  • Projecting future income and expenses
  • Supporting strategic decision-making
Inventory and Asset Management
  • Tracking inventory purchases and usage
  • Recording asset depreciation
Types of Accounts
Keeping track of different types of transactions is what helps you determine where cash is flowing to and from. It’s important to note that “accounts” in bookkeeping refers to transaction categories rather than actual bank accounts.

1. Assets: These are things your business owns.
  • Cash
  • Inventory
  • Equipment
  • Accounts receivable (money customers owe you)
2. Liabilities: These are things your business owes.
  • Loans
  • Credit card balances
  • Unpaid bills
3. Equity: This is what you, the business owner, own after liabilities are paid off.
  • Owner’s investment
  • Retained earnings (profits you keep in the business)
4. Revenue & Income This is the money your business earns from selling products or services.
  • Sales
  • Service fees
  • Interest income
5. Expenses: This is the money your business spends to operate.
  • Rent
  • Supplies
  • Salaries
  • Utilities
Bookkeeping…
Building Your Credit Score— Tools and Strategies

Building Your Credit Score— Tools and Strategies

Key Takeaways
  • Your personal credit plays a role in your business credit, so it’s best practice to focus on maintaining your finances in all areas
  • Credit building accounts are called “tradelines”, which can be either “revolving” or “installment”
  • Different types of tradlines should be used for different types of expenses
  • Implement strategies low utilization and becoming an authorized user in order to increase your credit score
  • Applying too frequently for tradelines can impact your credit score
  • Applying for a loan through NEWITY does not impact your credit score
How Credit Works
Improving your credit score sounds like a daunting feat, but when you’re knowledgeable and strategic, it doesn’t have to be nearly as painstaking as it seems.

Let’s break down the best credit building options and how you can use them strategically in order to boost your score and improve your overall financial profile.
Personal vs. Business Credit
Your personal and business credit are measured on separate scales, but your personal credit does play a role in your business’s credit.

Your personal FICO credit score is on a scale from 300 to 850. The higher your score, the less credit risk you pose. This score takes into account payment history, credit utilization, credit inquiries, and more.

Your business credit score is called an SBSS score. This score can range from 0-300 and is informed by your personal credit as well as credit factors filed under your business’s name.

Because your personal credit affects your business’s credit, it is important to maintain good credit in all areas of your life, especially if you’re considering applying for business financing in the future.

However, do not just rely on your personal credit score to represent your business. The stronger your business credit score is, the more robust your overall financial profile will be, and the more opportunities you’ll have to qualify for favorable financing terms, open credit cards, and grow your business.
Set Up Your Business Credit
  • When you apply for an SBA 7(a) loan, the debt you already hold factors into how much capital you qualify for.
  • You need to be able to prove that your revenue is sufficient enough to cover your current debt and the additional debt you’re applying for.
  • Lenders also take into account the type of debt you have, looking at interest rates and repayment terms to assess how your cash flow is affected.
Can You Qualify for an SBA 7(a) Loan With Existing Debt?
At its most basic level, qualifying for an SBA 7(a) loan is about proving to lenders that you can pay it back. Lenders and loan officers make this assessment by reviewing a variety of your financial statements; however, your existing debt and how it affects your cash flow is a significant factor in your qualification.

Even if your revenue is high and your credit is good, if your cash flow is being significantly hampered by existing debt, your ability to take on more debt could be limited.
What Amount of Debt is "Too…
Government Shutdown: What it Means For SBA Borrowers

Government Shutdown: What it Means For SBA Borrowers

Key Takeaways
  • A government shutdown occurs when congress cannot pass legislation for federal agency funding
  • During this time, SBA loans cease being processed
  • Submit your loan application anyway and stay responsive with your loan service provider so you’re first in line once processing resumes
Each year, the U.S. Congress votes on a federal government spending bill.

When elected officials in Congress cannot come to an agreement on the budget for the next year, funding lapses and the federal government is forced into a shutdown until a funding bill can be successfully passed, or Congress can agree on temporary funding.

When the federal government shuts down, the ripple effects are felt across the country and throughout the economy in different ways.

The government shutdown in December of 2018 – January 2019 lasted 5 weeks and resulted in a reduced economic output estimated at $11 billion that was never regained.
How Does a Government Shutdown Affect Small Businesses?
Federal shutdowns can affect small businesses in a few different ways.
1. SBA Funding
When the U.S. Federal government shuts down, the SBA shuts down.

When the SBA is not in operation, new SBA loan applications cannot be funded. Even if your application had already been submitted and in progress prior to the government shutting down, that progress comes to a halt until the government reopens.

The government shutdown in October 2025 was the longest U.S Federal Government shutdown to date and blocked an estimated 10,000 businesses from receiving $5.3 billion of SBA funding.
…
Small Business Tax Planning

Small Business Tax Planning

Key Takeaways
  • Understanding the tax implications of your business’s structure can help you file properly and identify your tax advantages
  • Consider opening an account on the IRS website in order to easily access and view your tax filings and payments
  • Your tax filings and IRS payments play a role in your loan application process, so it’s important to ensure you stay organized and up to date
Taxes aren’t fun, we get it.

However, filing your taxes properly and being aware of any tax advantages available to you can be the difference between your business’s success and prolonged stagnancy.

Not only will you be susceptible to costly fees and penalties, but improperly filed taxes can reduce your potential for savings and how you qualify for small business loans.

Many small business owners are often unaware of outstanding tax payments, delinquent filings, or even how their business’s structure is affecting the way their taxes are filed.

In the same vein, these entrepreneurs may also be missing potential tax strategies they should be taking advantage of and expenses that could be written off.
Entity Structure & Tax Filing
The first common mistake many small business owners make is failing to properly understand the tax implications of their business’s structure.

Your business’s legal structure determines how income is taxed, who reports the income, what tax forms are required, and more.

Choosing the right structure can reduce your tax burden, simplify compliance, and potentially protect your personal finances from your business’s liabilities.

Let’s break it down:
Sole Proprietorship
  • Flow-through taxation: Business income is reported on the owner’s personal tax return (Form 1040 + Schedule C).
  • Self-employment tax: Owners pay tax on net earnings (Social Security + Medicare) via Schedule SE.
  • No separate legal entity: The owner and business are legally the same.
  • Quarterly estimated payments: Required if you expect to owe more than $1,000 annually.
  • Deductible expenses: Home office, mileage, startup costs, etc.
Limited Liability Company (LLC)…
What is an SBSS Score?

What is an SBSS Score?

Key Takeaways
  • Your SBSS score is your business’s credit score that accounts for several factors, spanning both business and personal finances
  • SBSS scores range from 0-300, with “good” SBSS scores starting around 165
  • Your SBSS score is sometimes used in determining if you could qualify for a small business loan
What Is An SBSS Score?
SBSS stands for Small Business Scoring Service. This is a credit scoring service developed by FICO specifically for evaluating business credit. Unlike personal FICO scores, an SBSS score takes into account multiple factors, including business age, revenue, and the personal credit of all business owners.

SBSS scores range from 0-300 and are sometimes used by lenders to evaluate the financial standing and trustworthiness of small business loan applicants.

Loans through NEWITY do not use SBSS scores to assess loan eligibility.
Why Does Your SBSS Score Matter?
When you’re interested in receiving small business funding, your SBSS score can impact whether or not you qualify and how much financing you’re eligible to receive.

That’s why it’s so important to manage your personal and business finances responsibly and monitor your credit regularly, ultimately ensuring that you’re prepared when it comes time to apply.
How Is An…
What You Can (And Cannot) Use an SBA 7(a) Loan For

What You Can (And Cannot) Use an SBA...

Key Takeaways
  • SBA 7(a) loans offer flexible funding for operational and growth needs.
  • There are clear restrictions on how funds can be used, such as prohibitions on real estate purchases, large equipment, personal expenses, passive investments, delinquent taxes (without a payment plan), and refinancing other SBA loans.
  • Strategic use of SBA 7(a) loans can unlock growth and stability, especially when cash flow gaps, expansion opportunities, or high-interest debt are limiting your business’s potential.
SBA 7(a) loans are among the most versatile forms of small business financing. For entrepreneurs navigating growth, slow seasons or operational transitions, these loans may provide a safety net and a launchpad. SBA 7(a) loans facilitated by NEWITY function as working capital loans, giving small business owners the flexibility to fund everyday needs and long-term initiatives.

But what does this mean for you and your small business?

Here’s a breakdown of ways you can and cannot use an SBA 7(a) loan facilitated by NEWITY:
Permitted Uses Working CapitalCover day-to-day operating expenses, manage cash flow, and support growth initiativesInventory and MaterialsPurchase inventory…
Separating Personal and Business Finances

Separating Personal and Business Finances

Key Takeaways
  • Separating your business from your personal finances as much as possible will help you to stay organized, ensure your taxes are accurately filed, and manage cash flow
  • Consider registering as an LLC to protect yourself from personal liability for your business
  • Apply for EIN and DUNS numbers for tax & credit purposes
You’re wanting to start a small business— what are the first steps?

Setting your small business up for success in the long run means establishing a good foundation. Being proactive with your small business structure and finances now will save you time, money, and energy in the future.

Dane Colvin is a registered CPA and AVP of Finance and Operations at NEWITY and has worked with thousands of small business owners throughout their funding journey. Here is some advice he offers to new entrepreneurs who are feeling overwhelmed with the world of small business finances:
“I think the biggest thing, and something we see on the NEWITY side, is when you are…
Unsecured vs. Secured Credit Cards

Unsecured vs. Secured Credit Cards

Key Takeaways
  • Secured credit cards require a cash deposit that acts as “collateral” on your card balance, and are easier to obtain for people with lower credit scores
  • Unsecured credit cards do not require that initial cash deposit, but are more difficult to obtain, have higher credit limits, and offer better rewards programs on money spent
  • If you have a limited or poor credit history and do not qualify for an unsecured credit card, a secured credit card is a good starting point to build credit
  • Credit cards are strategic credit-building tools that can play a large role in your business’s overall growth
What is the difference between secured and unsecured credit cards?
An unsecured credit card is what most people commonly think of when discussing “credit cards.”

This is a credit card that has a credit limit set by the issuing bank based on your credit history. You use this card to make payments, then pay off the balance at the end of the month.

A secured credit card is only slightly different in that it requires an initial cash deposit to act as collateral in the event that you do not pay off your credit card balance.

Let’s say you open a secured credit card and make a cash deposit of $3,000. That deposit acts as the credit limit on that card, meaning you can only spend up to $3,000 on that card before paying off the balance.

Every time you pay off the balance on that card, you pay it from the cash in your checking account, as you would with an unsecured credit card.

However, if you were to neglect to pay off your secured credit card by the time the balance is due, your bank would seize that initial $3,000 cash deposit in order to cover the amount you owe.
What are the pros and cons of…
Do You Need Collateral For An SBA 7(a) Loan?

Do You Need Collateral For An SBA 7(a)...

Pledging collateral for a business loan can seem complicated, but it doesn’t have to be.

In this article, we’ll break down the definition of collateral, why it’s necessary, and how you can get a loan without needing to pledge collateral at all.
Key Takeaways
  • Collateral is a set of assets pledged by a borrower to a lender, should the borrower default on their loan
  • Collateral could be almost anything, from business assets to personal assets
  • NEWITY facilitates non-collateral loans up to $50,000
What is Collateral?
When you apply for a loan, your lender needs to know that they’re protected. Even if your finances show that you are trustworthy, lenders often want extra protection against potential loss of value.

Collateral is that extra protection. If you as the borrower were to default on your loan, the lender would seize the collateral that was listed with the loan in order to get some or all of their money back.
How is Collateral Identified?

Items used as collateral could be nearly any store of value, including:

  • Equipment
  • Inventory
  • Furniture
  • Real Estate
  • Business Vehicles
  • Cash or Savings
  • Retirement Accounts
  • Patents, Trademarks, or Other Intellectual Property
  • Trading Assets

When evaluating collateral, lenders will consider the Adjusted Net Book Value (ANBV) of assets. This is a calculation that takes the original value of an asset, then subtracts depreciation, market conditions, wear and tear, forced liquidation value, and more.

How Much Collateral is…

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To qualify for an SBA 7(a) small business loan, your business must be:

  1. U.S.-based and operated
  2. Owner supported / owner funded
  3. Eligible per the SBA’s requirements

Your loan amount will determined by the business’ average annual revenue, FICO score, and years in business