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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. 

Build Business Credit by Going Green

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Build Business Credit

 

Last week on Earth Day more and more individuals, corporations and governments made personal commitments towards creating a global green economy.

Did you know you can also build business credit for going green as well?

There are many ‘Go Green’ companies willing to extend credit to your business in an effort to help you become a green company. These credit lines give you access to various business and consumer products designated as eco friendly.

Each purchase made using your line of credit helps establish business credit because your payments are reported to the business credit bureaus.

One company takes it a step further by taking 10% of each of your business purchases and donating it to a “Green Organization.”Now that’s what I call supporting the environmental movement.

If you think going green will cost too much money then think again because in the long run it can save your business a bundle. For example, high-efficiency light bulbs will cost you 75% less than standard ones and last ten times longer.

In addition, more and more consumers prefer to do business with a company that’s eco-friendly so going green should be an important part of your company’s branding strategy.

Companies like Johnson Controls saw an increase in their sales due to its environmental efforts. By going green they were able to stand out in their industry which helped gain attention for its business resulting in increased revenues.

Before you apply be sure to have the following in order to qualify:

  1. Federal Tax ID#
  2. Minimum of two years in business
  3. Business listed in 411
  4. Business address
  5. Business bank account

Keep in mind you can get approved if your business is less than two years old but your initial line of credit will be much less.

You won’t have to supply a personal guarantee nor will your personal credit be checked but more than likely you will need to put 20-30% down on purchases and finance the rest.

One of the unique differences with some of these new business-friendly creditors offering green products is that they allow you to finance your purchases while the majority of vendors require that your invoices be paid in full usually within thirty or sixty days.

Once you get approved you can start by greening your office which will cut your energy costs. This is not only good for the environment but also for your company’s bottom line.

This new age of green financing is truly an exciting opportunity for your company to go green, build small business credit, cut energy costs and support the environment.

As the green movement makes headway into the corporate world, and small businesses like yours are taking action I believe there will be an even greater demand for green credit financing for purchasing eco friendly products so more companies like yours can go green!

Are you ready to Go Green and apply for Green Credit Financing for your business? 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 access to green credit sources,vendor lines of credit, 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) =>

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A membership system helping business owners build small business credit. 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. 

Looking for Secured Business Credit Cards?

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Secured Business Credit Cards

While consumers have more than enough secured credit card offers to choose from it seems to be more of a challenge for small business owners.

If you are having a hard time finding the right secured business credit cards for your company don’t worry because I’m hoping this post will point you in the right direction.

What’s most important is first ensuring that the secured card you select as a business does in fact report to the business credit reporting agencies not your personal files.

Most of the cards you hear about that help rebuild your credit are for consumers and not for businesses. You also have to be careful because some of these cards will hurt your credit rather than help it.

What I mean is that some cards in the marketplace are issued by high risk lenders and by having these types of cards reporting on your files will automatically identify you as a high risk to other lenders in the industry.

For example, First Premier Bank is known as a high risk lender and its rates prove it. They even offer a card with a 79.9% interest rate for the riskiest of borrowers.

So stay away from secured credit card offers from high risk lenders like First Premier Bank. You may want to consider Open Sky Secured Visa Credit Card or some of the other secured credit cards listed in my blog.

Now when it comes to your business I would suggest applying for a business credit card that does not report to your personal credit. These types of unsecured business lines of credit require strong personal scores but the cards you obtain do not report to your personal credit.

If you have less than stellar credit consider opening a couple of fleet credit cards which we provide in our business credit building system.

Keep in mind with a secured fleet credit card your deposit equals your credit limit but it doesn’t work like a debit card. The money you have on deposit is untouched and is simply security in case you default on your payments.

The larger the deposit ($1,000+) you can put down the greater the credit limit your card will be. Best of all the higher the credit limit the better it reflects on your business credit files.

If the funds are a bit of a stretch there are also other secured business credit cards that only require a $500 deposit that report to the business credit bureaus as well.

Once you have a secured card it’s important to keep the account active by using it to make business purchases. Keep the debt to credit utilization low which is typically no more than 30%.

You also need to pay your bill ahead of schedule and if possible increase your deposit at least once every six months. Remember, your goal is to eventually qualify for unsecured business credit cards and it all starts with establishing a solid payment record on your files.

After six months of on time payment history you can also request an account review to see if you qualify for a credit limit increase with no additional security deposit.

So when it comes to secured business credit cards I encourage you to select the right card, make a deposit, make business purchases, pay ahead of time, increase your limits and request a review after six months.

Looking for more secured and unsecured business credit cards that report to the business credit bureaus? 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 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) =>

Marco CarbajoMarco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for AllBusiness, a subsidiary of Dun and Bradstreet 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 the SBA Community, American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.

Creative Business Financing Options for Your Small Business

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Creative Business Financing

 

While traditional lenders have been sticking to their strict underwriting guidelines there are several creative business financing tips that may just help get you the funds you need. 

Before getting into the details let me be the first to remind you that separating your personal credit from your business credit should be your primary goal. If you’re at the early stages of building your company’s credit file then you may have to use your personal credit to secure financing until your company becomes creditworthy.

Merchant Cash Advance

This option has many benefits if you are in need of short term business financing. In a nutshell you are borrowing against future credit card sales in order to receive cash immediately.

Best of all you can qualify with bad credit, no personal guarantee and no collateral.

Some of the requirements are:

  • At least 9 months in business
  • Process $5k or more in monthly credit card sales

Finally your repayment is based only on your credit card sales and it’s automatically debited so you don’t even have to worry about a payment schedule.

Social Lending

Lending networks like Lending Club and Prosper provide a way for you to obtain creative business loans that range from $1k to $25k for your business. Rather than go through the red tape that traditional lenders impose these networks make the process so much easier. You simply post a loan listing and set the rate you want to pay and they do the rest.

The rate is fixed and so are your payments but best of all you don’t have to take the loan if you don’t like the rate.

Some of the requirements are:

  • Personal credit score of 640+ for Prosper
  • Personal credit score of 660+ for Lending Club
  • Debt-to-income ratio of 25% (excluding mortgage)

Even though you’re securing the loan using your personal credit the interest rate you will pay is much less than the rate you will pay if you use your personal credit cards for funding.

Vendor Lines of Credit

Another alternative to creative business loans is obtaining vendor credit from your suppliers and other companies whose products and services you can use. This not only helps you conserve cash flow but also builds your corporate credit file too.

In most cases you can qualify with no personal credit check or guarantee which supports your overall business credit building strategy.

Equipment Leasing

When you need business financing for business equipment and you can’t secure finances through traditional sources like a bank than leasing is a viable alternative. You not only benefit from tax deductible lease payments but you also can get a buy-out option as well.

In addition you get a low fixed rate and a low down payment which is usually one or two lease payments upfront. Compared that to a traditional loan, where a bank requires up to 20% down of the total price of the equipment.

As you can see there are many creative business financing options that will provide your business the financing it needs short term or long term while you continue to work on establishing the creditworthiness of your company.

Looking to access creative business financing sources? 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 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 corporate credit builder membership helping business owners establish no personal guarantee business credit. 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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