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Small Business Loans for Bad Credit

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Small Business Loans for Bad Credit

Recently I recorded a podcast titled ‘Don’t Let Bad Credit Keep You from Getting a Business Loan’ which covers several ways of obtaining small business loans for bad credit risks.

If you’re in the process of starting a business with bad credit one of the things that I would suggest is starting a personal credit recovery plan.

Now I know time is of the essence for you but as your listen to this podcast and gain some insight into what business financing for bad credit means and what options are available consider the solutions as well.

It’s not a shame to have bad credit due to financial setbacks but it is a shame to keep it.

Are you looking to raise your credit scores?  Need credit repair to jump start your personal credit recovery plan? Be sure to take advantage of all the resources available so you can get back on track.

As you can see a business loan with bad personal credit is possible even during these challenging times. As you work on repairing your personal credit these options can be a temporary solution for your business to obtain the funding it needs. While some of these choices are costly you have to ultimately decide if it’s a price your willing to pay.

To access more business credit building secrets become a member of my Business Credit Insiders Circle! 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 business credit building membership helping business owners build 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.

Vendor Credit Lines Are Like Small Business Loans

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Vendor Credit Lines

Qualifying for a bank loan or other traditional sources of business financing can seem like an impossible task if you’re like most small business owners that haven’t even begun to establish credit in the name of your business let alone have any type of business credit scores.Vendor Credit

You probably believe that you have no other choice but to use your personal credit but let me share with you a viable alternative before you slap down your plastic.

Vendor credit lines also known as trade credit is when a company extends credit to your company in order to allow you to buy its products and services upfront but defer the payment for a later date.

After you purchase a product they will issue an invoice which must be paid according to the terms of your agreement. If you’re a startup company or have no business credit then most net 30 vendors will have net 10 or net 15 day terms initially. Keep in mind these terms can be extended to net 30, 90 or even 120 day terms if you continue to build a solid payment history with your vendors.

Some of the major benefits include:

  • Conserving Cash Flow – By purchasing products or services and deferring the payments for a later date your business is able to conserve cash and have the funds it may need for other important expenses.
  • Establish Business Credit Scores – As each invoice is paid on time you begin establishing a positive payment history on your company’s credit files. Remember it takes a minimum of four accounts reporting to generate business credit scores on your Dun & Bradstreet business credit report.
  • Improve Credit Capacity – When your vendor credit limits increase so does your company’s overall credit capacity. Larger credit limits showing on your files will improve the overall creditworthiness of your business simply from the fact that banks and lenders will see that other companies are willing to extend credit to you in much larger amounts.
  • No Personal Credit Check or Guarantee – The majority of vendors will not require a personal credit check or guarantee which clearly protects your credit scores and liability.

Now for business credit building purposes there are some key factors that never get mentioned which can make all the difference in the world.

You see not all vendors report your payment history, in fact out of half a million vendors in the U.S. less than 6,000 supply payment data to a business credit bureau.  So either you should select the right companies to apply with or you can always purchase one of DNBs trade reference programs.

Several other factors to consider are the frequency of reporting and how the data is being reported by your vendors. Some report on a quarterly or even yearly basis which does not help in building your profile in a timely manner.

As far as your payment data it’s vital that the actual vendor credit limits that your company is approved for displays on your file not just the amount owed. Some vendors will not report this information and it can have a dramatic impact on how lenders view your company’s creditworthiness plus it affects the size of the credit limit recommendations that business credit bureaus list on your file.

I know this can seem confusing and time intensive but there are ways to streamline this whole process taking all the guesswork and frustration out of the equation. By taking advantage of all the tools and resources available you can improve your company’s ability to qualify for the business financing it needs.

Looking to access vendor credit lines? 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 audio seminar ($597 value) =>

 

Marco CarbajoMarco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit services membership helping business owners build business credit without 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.

What’s on Your Small Business Credit Report?

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Small Business Credit ReportSmall Business Credit Report

 

I’m sure you have a habit of checking your personal credit scores, credit reports and credit card statements on a regular basis but how much attention do you pay to your small business credit report?

While there are several business credit bureaus that collect data let’s stick with the three main ones. Keep in mind that each file you have listed is going be different with each bureau so it’s important that you monitor your files on a regular basis.

Dun & Bradstreet Business Credit Report

This report also known as the Business Information Report or BIR is an overall profile that suppliers and lenders will use to evaluate your company and tends to be the most popular D&B report that creditors pull. The report is pretty extensive because it includes your company’s financial information, history & operations, payment history and details.

Keep in mind that the details of your company like financials are supplied by you when you set up your file so be sure to keep this information updated through eupdate so it matches the numbers you provide on credit applications. Any inconsistencies can cause your company to get declined.

Two things you should pay special attention to is the paydex score and credit limit recommendation listed in your report. A 75 or greater Dun & Bradstreet credit rating is considered a good risk but what carries more weight is the credit limit recommendation.

The conservative credit limit is for companies that prefer to minimize risk as much as possible and the aggressive limit is for creditors that will accept more risk.

Experian Business Credit Report

This report also known as the CreditScore Business Report includes you’re company’s business and credit information. It’s considered Experian’s most popular report used by creditors and specifically you want to pay attention to your business credit score.

A score of 90 or greater is excellent and it’s based on your company’s industry risk, number of trades, length of history and your debt to credit limit ratios. As I mentioned on previous posts you want to avoid selecting a high risk SIC and NAICS classification code for your company because this can have a negative impact on your scores.

Now don’t be surprised if your company is not listed with Experian because the only way to establish a small business credit report is when a supplier or lender reports your company’s payment experience to them.

Equifax Business Credit Report

This report could also be referred to as the Equifax Small Business Report and it includes a summary of your company’s financial and non-financial accounts. One of the unique differences in this file is the two credit rating scores known as the Equifax Credit Risk Score and the Equifax Business Failure Score.

Your risk score can range from 101 to 992 with the higher the number being the lower the risk. Some of the factors that contribute to this include derogatory trades, length of history, credit limit amounts and number of employees.

The failure risk score predicts the chances of your business failing over the next 12 months. This number ranges from 1,000 to 1,880 with the higher the number being the lower the risk of possible failure.

Some of the key factors that determine your score include length of time since the oldest account was opened, debt to credit limit ratios, negative payment history and number of trades.

This is another file that gets created only when a supplier or lender reports your company’s payment data. It’s said to be one of the most difficult bureaus to get listed with and this may be because many of the reporting partners are banks and lenders.

This is why I recommend establishing a reporting bank loan as soon as possible. This not only will have a positive impact on your small business credit report but it will also improve your overall bank rating.

As you can see your business credit files require the same level of attention that you give to your personal credit files. By knowing how your company’s risk level is being rated by the major business credit bureaus the greater level of confidence you will have when you apply for business financing.

Looking to build your small business credit reports? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit builders 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) =>

To Your Success In Business and in Life!

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About the author

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 Dun and Bradstreet Credibility Corp, the SBA.gov Community, 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’.

Smart Business, Stupid Business: Interview with New York Times Best Seller Diane Kennedy

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Smart Business, Stupid Business

 

Smart Business Stupid BusinessRecently, I spoke with my good friend and New York Times Best Seller Diane Kennedy about her brand new book ‘Smart Business, Stupid Business’.  She offers excellent insight into the $40 billion dollar problem that puts most small business owners out of business.

Here’s part of the interview I did with Diane Kennedy.

What inspired you to write this book?

Many people have come to realize that having their own business means the only real control they can have over their financial future. The number of new home-based businesses has sky-rocketed. Yet, there is very little training and information available about what you need to know to run your business from a tax, accounting and legal perspective.

How did you come up with the title?

Everyday a business owner stands at a crossroads. They can have a smart business or a stupid business. A stupid business fails, on average, in less than 5 years. A smart business grows, and touches lives in positive ways. A smart business owner knows how to read important stats on his business, stand up to an IRS audit and stop employee theft cold!

What was one of the most surprising things you learned in creating Smart Business, Stupid Business?

I was shocked to learn that somewhere between $400 billion – $600 billion is stolen by employees every year. It’s the single biggest reason that businesses fail! Yet, there are some very simple things that business owners can do that cost little or no money and that will dramatically reduce the risk of employee embezzlement.

These are the type of strategies that smart business owners can put into place today and that they’d know about if they only had the time and resources to study up on all the financial, accounting, tax, and legal information they needed.

What is a word of advice that you have for small business owners operating as sole proprietors?

In one word: DON’T!!

There are 4 reasons to RUN away from the Sole Proprietorship for your business:

(1) you put everything you own personally at risk.
(2) You will pay an extra 15.3% tax on income from the business.
(3) You can’t build business credit.
(4) You have a 1 in 3 chance of an IRS audit.

I can’t think of a single reason why you SHOULD have a Sole Proprietorship.

Of the books that you have written, which is your favorite?

Without a doubt, “Smart Business, Stupid Business” has been my favorite.

Let’s face it; we’re in a deep recession. A lot of people have lost their homes, their investments, their pension and their jobs. And they know the only way to brighten their financial future is by taking charge. And, that means starting their own business.

But then what? Most businesses fail in the first 5 years.

But it doesn’t have to be like that. There are things you can do to protect your assets, create cash flow quick, find loans, build value, turn lazy assets into income, protect against employee theft, create systems that work so you don’t have to and learn how to foretell your business’s financial future.

My other books were about taxes and I love that, but it’s only one part of having a business. In “Smart Business, Stupid Business”, it’s about taxes PLUS all the other things a Smart Business Owner needs today.

I believe that Smart Business Owners are the only thing that can save this economy. I’m proud to give them a little help with some quick and easy tools to make their business stronger.

I want to thank Diane for this interview and I highly recommend this book for every business owner. The timing and the message couldn’t get any better!

To listen to my Eights Steps to Ulimate Business Credit seminar hosted by none other than my good friend Diane Kennedy submit your name and email below for details and receive this free 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 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.  Follow Marco on Twitter @MarcoCarbajo and read more of his insights on building small business credit.

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