Business Credit Applications

Has your business recently been turned down for credit?

I’m sure we can agree that nothing can be more frustrating than not knowing what lenders and vendors are looking for when reviewing business credit applications. In today’s post we’re going to shed some light on that very subject and what you can do to avoid the most common triggers for a denial of business credit.

Keep in mind, the credit review process is different with every application but there are quite a few similar factors that play a role in the decision making process. The good news is we have been researching the primary reasons why lenders and vendors have been declining business credit applications in the 4th quarter of 2015 and the 1st quarter of 2016.

Without further ado, here they are:

1. Could not verify the business name with Secretary of State – The Business entities section of the Secretary of State’s office processes filings, maintains records and provides information to the public relating to business entities (corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships and other business filings). If your company cannot be verified with the State then this triggers a red flag.
2. Entity is not in good standing with the Secretary of State – In addition to verifying the business, it also needs to be in good standing. Businesses that don’t stay on top of their compliance obligations can lose their Certificate of Good Standing with the State.
3. Employer Identification Number (EIN) did not verify with the business name – Business owners and other authorized individuals can submit a name change for the business by sending a request via mail.
4. Phone number provided not in 411 – A non-listed business triggers a red flag with most creditors. So it’s essential to get your company listed in the major directories used by lenders.
5. Could not verify business name with 411 – A mismatched 411 listing may occur when variations of your business name exist. Use the exact same company details on all listings, applications, filings, documents and bank accounts.
6. Business address on google maps or USPS is listed as residence
7. No website found
8. Phone number provided not business; it is a cell number, residence, etc. – Use a dedicated business phone line for your company with the proper voicemail that identifies your company.
9. Email provided is free service (Gmail, Yahoo, AOL, and Hotmail)
10. Not enough time in business – Certain lenders and vendors require a minimum 2 years in business.
11. Business name does not verify
12. No Dun & Bradstreet report – No Dun and Bradstreet listing found in its database.
13. No Experian Business report– No Experian Business listing found
14. No Equifax Small Business report – No Equifax Small Business listing found
15. No Paydex® score – Minimum of three trade references need to be reporting to generate a score.
16. No Experian Business score
17. No Equifax  Small Business score
18. Thin credit profile – Business/Personal credit report too thin
19. Challenged credit – Derogatory Business/Personal credit reports or excessive inquiries
20. Low Business/Personal credit scores
21. No comparable credit found
22. In the construction industry – Certain industries are classified as high risk which many lenders tend to avoid.
23. In the credit repair industry – This is a highly regulated industry that lenders and vendors avoid at all costs.
24. Non listed business – Underwriter search found no business listings online
25. No entity status; Sole Prop, DBA, Partnership, LLP, Non-Profit

Now that you know the reasons why business credit applications get declined, there are steps you can take today to improve your chances of approval. First, many of the reasons listed are lender compliance guidelines which we show you how to complete and verify in our Business Credit Building System. Once completed, you’ll be ‘credit ready’ and able to apply for credit using our database of approved vendors and lenders.

Secondly, check if your company has a credit file listed by conducting a search on Smart Business Reports for Experian Business, D-U-N-S Search for Dun & Bradstreet and the search platform for Equifax Small Business. If your company is listed be sure all the information is accurate and up-to-date. It’s essential that your company info matches across all forms of verification; business credit reports, filings, online business listings, 411, etc.

Finally, work on building, improving, managing and protecting both your personal and business credit reports/scores. If you’re aiming to apply for unsecured business financing you can always use a business credit partner if you have challenged credit; but it’s to your advantage to work on repairing your personal credit while building your business credit at the same time.

Ready to build your business credit the right way? 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 gets you lender compliant and provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, 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 business credit building audio seminar ($597 value) =>

To Your Success In Business and in Life!

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About the author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, Business.com, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.