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How Business Credit Lenders Measure Up Your Small Business

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Business Credit Lenders

 

In the past big used to matter in every aspect of business but as we all know times have certainly changed and as Seth Godin says it best ‘Small is the New Big’.

Whether you run a business from your home or a small office qualifying for corporate credit will require that you have a ‘Big’ business structure in place.

Now I’m not talking about the big office or big staff or even a big elaborate PBX phone system. What you do need is the basic operational components that make your business a real business in the eyes of business credit lenders.

By incorporating your business you are certainly moving in the right direction but that alone doesn’t give you a business credit green pass and open the financing floodgates.

However, with a corporation or LLC your company is treated as a separate legal entity and operates in its own capacity on behalf of the shareholder. It conducts business, generates revenue, hires staff and pays its own taxes.

With that said there’s still many other guidelines that your company will need to conform to in order to qualify for credit. The list below is a sample of some of the basic things you should have in place that will not only help your credit approval rate but also increase sales as well.

Business Phone

Having a dedicated phone line for your business is mandatory. Now you don’t have to go out and hire someone to field calls just be sure the messaging system identifies your company name. You also will need to get your number listed with certain directories which corporate credit lenders use to verify your company information.

Business Address

Whether you have a brick and mortar location or work from home it’s important to have a physical location for your company. Lenders can verify your business address and may even schedule an onsite visit. 

Using a virtual office usually doesn’t work because these services use the same address and suite number for all the companies so your address can never be verified.

Company Web site

An online presence is almost mandatory if you want to be considered a real business. It also provides lenders and creditors a quick snapshot of what your company is about and what products and services you have to offer.

I wouldn’t suggest going with a free web site and free hosting because it shows and the goal here is to create a real business so don’t side step this one but don’t break the bank either. Just create a nice professional looking site and be sure to register a domain name preferably a dot com.

Company Email Address

This is another one of those small items that make a difference both with lenders and potential customers. A dedicated email is another thing that impacts how your business will be portrayed. For example, what sounds more professional to you [email protected] or [email protected]?

Obviously the company email address sounds much more professional and automatically portrays you as a real business compared to just using a free email account.

Business Bank Account

Many of the credit applications will require a bank or bank loan reference and some even require a bank contact name and phone number. Before you open a small business checking account I would suggest identifying the specific loan products that you will need.

Every bank has its niche and specialty loan products and some banks are even more small business friendly than others. Also make sure you have a nice rapport with your banker because a lender may give him a call inquiring about your company’s standing with the bank.

These are just a few of the many corporate conformity guidelines I cover with members. While small is the new big in today’s business environment it makes all the difference in the world to treat your business as if it is a ‘Big’ business.

Are you ready to launch or establish a creditworthy company? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you corporate conformity solutions, access to premium vendors, business credit cards, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

About the Author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A web based membership helping business owners obtain business credit with no personal guarantee. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

Microfinance Loans Provide Special Benefits for Small Business

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Microfinance Loans

 

While microcredit loans first originated in the Third World as a way to help launch small businesses thousands of American entrepreneurs are finding it as the alternative solution to traditional lending. Microfinance loans

Many of the micro lenders, which are mostly non profits, receive the bulk of its funds from the Small Business Administration. 

In order for these micro lenders (intermediaries) to loan money to micro borrowers there are specific funding and training guidelines set by the SBA.  

One of the reasons why this funding option has become so attractive to entrepreneurs is because it’s less difficult and time intensive to qualify for this small loan which ranges from $500 to as high as $35k compared to the traditional lending route.

This new age of micro loans for small business offers a variety of special benefits that I’ve broken down for you into the following:

Business Training

The SBA requires that intermediary lenders provide business training and technical support to its borrowers. This educational component that micro borrowers will need to complete before the application is accepted is a step in the right direction.

By adding sound business training and planning more start ups can avoid making costly mistakes resulting in successful loan repayments and building a solid credit history in the process.

Flexible Requirements

Another area that makes these microcredit loans so attractive is the flexible guidelines for loan approvals. While many lenders are unwilling to approve a loan unless you have pristine credit, business history and sufficient collateral micro lenders take other factors into consideration.

This may include personal collateral and a personal guarantee but what truly separates micro lenders from traditional lenders is the personal character component. Micro lenders take a more hands on approach with their borrowers and go so far as to even contact personal references.

Building Credit

Microfinance loans also provide a way for small business owners to build or rebuild personal credit history and raise credit scores. Many applicants have little to no credit history and do not have the collateral that typical businesses use to secure a loan like commercial real estate, accounts receivables or inventory.

As you make payments on your small loan the micro lender reports its payment experience with you to the credit bureaus. This builds positive credit history and increases your level of creditworthiness in the eyes of lenders.

Once a micro loan is paid in full then most micro borrowers are able to qualify for greater amounts of financing through traditional sources if they prefer.

Time

Time is of the essence especially if you are in need of funds for working capital. Waiting for a traditional loan backed by the SBA can take months where microfinance loans can take as little as 14 days to fund.

Keep in mind that each micro lender has its own lending requirements and it handles its own approvals at a local level. You can find more information on SBA’s Guaranteed Loan Programs and a list of approved micro lenders nearest you at the SBA web site.

Some additional micro lenders you may want to consider reviewing are Accion, Kiva, Prosper, Zopa and Lending Club. Each of these lenders has its own requirements, lending limits and interest rates so take the times to review which one best fits your needs and comfort level.

The recent economic crisis created a huge demand for this new age of finance called micro lending. With the SBA stepping up to the plate and allocating $50 million in funding for its micro loan program it’s no surprise that this financing option is going mainstream.

Whether you’re just beginning your first business venture or need the working capital for an existing business, this small loan may just be the solution you’ve been looking for.

Looking for more funding sources to launch or grow your business? Become a member of the Business Credit Insiders Circle and gain access to a proven step by step business credit building system. A system that provides you access to premium vendors, business credit cards, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) => 

About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. 

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