Scott McLaughlin earned his first IndyCar Series win Sunday in the season-opening race through the downtown streets of St. Petersburg.
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Haas has become the first Formula One team to release images of its 2022 car ahead of the upcoming season.
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The Indian driver is aiming for the title in his third season in Formula 2
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It’s a new year. Whether you have a new business or you have been running your business for a while, these tips will help make sure you have a business setup for success in 2022 and beyond.
The way you set your business up affects its fundability. It cannot be fundable if it is not built on a foundation of fundability. What is fundability, and what are the building blocks of a fundable foundation?
Fundability is a business’s current ability to get funding. Of course, there are things you cannot control related to fundability. Yet, there are plenty of factors you can control. These are what you need to focus on. They include setting your business up with a fundable foundation, and more.
Follow these steps to build a fundable foundation for your business.
This is more important than you may think. It includes a lot more than just choosing a name. First, check with your Secretary of State to find out if they require that a business name be unique.
Then, keep any indication of a high-risk or restricted industry out of your business name. Your business can be Rachel’s rather than Rachel’s Gas Station. This can help prevent an automatic or nearly automatic denial from a lender just because of the type of business. It can increase the chances that your business actually gets a chance at funding.
If your business is perceived as high risk from the beginning, the application may not even get to the underwriting process.
A fundable business setup includes a physical address where you can receive mail. Never use an UPS box or a P.O. Box. In fact, some lenders will not approve and fund unless this is the case. If you don’t want to use your home address, you can use a virtual address. In fact, it’s not a bad idea if you need to hold a meeting or an interview. Regus, Davinci, and Alliance Virtual Offices are all good options. Still, keep in mind that there are credit providers that will not accept virtual addresses.
Not surprisingly, toll-free phone numbers are best. Lenders see them as a sign of business credibility. It’s very easy and inexpensive to set up a virtual local phone or a toll free number. If you want to avoid a separate phone, just have your business number forwarded to your personal phone.
Additionally, your business number needs to be listed with 411 for most credit issuers and lenders to approve you. Check for your record to see if you’re listed. While you’re at it, make sure your information is accurate. No record? Then use ListYourself.net to get a listing.
Now, get a free EIN for your business at IRS.gov. This is an identifying number for your business. It’s similar to your personal Social Security Number. You’ll use it on all of your business documents.
Incorporating gives you more credibility in many cases. It sets up your business as separate from you, its owner. Of course, by default incorporating reduces your personal liability. Other entities, like sole proprietorships and partnerships, do neither.
Contact State, County, and City Government offices to see if there are any required licenses and permits to operate your type of business. Licensing requirements differ depending on state, town, and industry. Always make sure you have the proper licensing for your corporation. Often, your Secretary of State will have this information.
You must have a separate, dedicated business bank account. Keep in mind, you have to keep business and personal funds separate for the IRS anyway. Having a separate business account makes that process easier and reduces the risk of audit at tax time.
More than that, many credit issuers require a business bank account before they will approve you for an account. In addition, the date you open your business bank account is the day that lenders consider your business to have started.
As a result, it doesn’t matter if you incorporated your business 10 years ago. If you just opened the business bank account yesterday, then in the eyes of credit issuers your business started yesterday. Since there is a minimum time in business requirement on almost all business credit accounts, the sooner you open your business bank account, the better.
A business bank account is also required for getting a merchant account, so your business can accept credit cards. For years, studies have shown that customers spend more with plastic than with cash.
It’s highly likely that lenders and credit providers will research your business online. As you can imagine, it is best if they learn everything directly from your business website. Not having a company website can hurt your chances of getting business credit. Keep in mind though, an unprofessional website can do just as much damage.
You need it to be a professional website. That means it’s got to have helpful information for anyone who finds your company online. Additionally, it should be hosted professionally. Buy web hosting from a hosting company like GoDaddy or HostGator. Try to avoid a free version of a hosting service like Weebly or Wix.
Your domain should be your business name, if possible. A free Wix or Weebly domain does not look professional. For example, www.yourbusiness.com appears much more professional than www.yourbusiness.wix.com.
Furthermore, you need a company email address for your business. Guess what? It needs to be on the same domain as your website. It often comes with a website domain provider such as GoDaddy. Do not use Yahoo, AOL, Gmail, Hotmail, or other free email services. Again, owner@yourbusiness.com appears much more professional than yourbusiness@yahoo.com.
After you set your business up with a fundable foundation, the next business setup consideration is risk. For some businesses this isn’t an issue at all when it comes to funding. Yet, for others, it can be tricky.
The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies. You choose your NAICS code on the IRS website.
There are inherent issues in every single industry. However, those listed under certain NAICS codes are considered riskier than others. It doesn’t matter if the business is prospering, they are still considered a risky business. Usually higher risk comes from chances of injury or frequently engaging in cash transactions, or a low barrier to entry.
The IRS, lenders, banks, insurance companies, and business CRAs use NAICS codes. They are trying to determine if your business is in a high-risk industry classification. The NAICS puts out a list of high-risk and high-cash industries. Higher risk industries include casinos, pawn shops, and liquor stores but the NAICS list is old and has not been updated in years.
When it comes to funding, risk matters big time. There are several industries where lending institutions are hesitant to do business. In those particular cases, there are stricter underwriting guidelines. In contrast, some industries are considered so risky they are automatically denied.
Those businesses are left looking for other business funding solutions.
These can include:
Of course you want to be impeccably honest when it comes to selecting your NAICS code. Still, if more than one can apply, you don’t have to choose the one that’s higher risk. It pays to check and be careful when making your selection.
If only high risk codes apply, there’s nothing at all wrong with changing your business to match a related but lower risk code.
A big reason for many credit and loan denials is inconsistent business information. This makes it hard for the lender to locate a business offline or online. It also sets off fraud alarms in the minds of those making lending decisions.
To avoid this, make certain your business name and other information is the same everywhere. That includes incorporation papers, licenses, utility statements, and bank statements among other things.
If you change your business name, be sure to change it everywhere.
This means you change it in these places, among others:
Minor details such as using an ampersand in your name in one place and the word “and” in another can cause a lot of problems. Be careful and consistent with all business information.
While you are working on setting up your business, you are going to need funding. If your business setup is not yet conducive to fundability, you’ll need to pursue some alternative options. One great possibility is the Credit Suite Credit Line Hybrid.
A credit line hybrid is a form of unsecured funding. Our credit line hybrid has an even better interest rate than a secured loan. You can get 0% business credit cards with stated income, and many of these report to business CRAs. That means you can build business credit at the same time.
This will get you access to even more cash with no personal guarantee.
You need a credit score or a guarantor with a credit score of at least 680. There is no requirement for financials, and you can often get up to $150,000. Be aware, some cards may report on your personal credit.
Honestly, you cannot build a fundable business without first having a fundable foundation. This is what the business setup is all about. All other aspects of fundability hinge on the foundation, so don’t neglect it. Don’t skip it. If your business is already operating and you need to backtrack to make this happen, do it now. The sooner the better.
The post 10 Steps for Creating a Fundable Business Setup in 2022 appeared first on Credit Suite.
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It’s no secret the past two years have wrought havoc on the economy. Workers were laid off in droves. Small businesses suffered. Now, with things starting to get back on track, many displaced employees have found their own entrepreneurial spirit. As a result, they are looking to start their own business. In fact, it’s being dubbed “The Great Resignation,” and it’s going to turn small business lending on its head.
Many of these displaced employees are in the 30—45 age range. While some are looking for other employment, many are considering starting a business. Of course, this age range typically does not yet have a huge retirement plan, or a lot of savings at all for that matter. As a result, the demand for small business financing is going to increase greatly.
Whether you are ready to start a business or already own one, there are some things you need to know about small business lending in the new year.
Everyone is saying it, and they’re right. Sadly, interest rates are rising. Thankfully, throughout the pandemic the Fed kept the rate low. Obviously, it was an effort to counteract all the other crazy things happening in the economy. Now, it’s becoming obvious that a correction will be needed.
It’s time to pay the piper, and the Fed is considering rate hikes as early as this year. What does that mean for small business lending? If you need business funding, or think you may need it in the future, now’s the time to jump on a loan or a line of credit.
Here is another reason to make sure you secure funding as soon as possible. Inflation is imminent. In fact, according to comments made to CNBC by Fed President James Bullard, it’s coming sooner than expected:
“… we were expecting a good year, a good reopening. But this is a bigger year than we w
ere expecting, more inflation than we were expecting.”
It’s already started, and it always gets worse before it gets better. Make sure you have access to funds now, before it costs you more to get them. Then, when you start to feel the squeeze of inflation, you have what you need.
Even though small business funding options are increasing, it’s not likely the industry will see tighter regulations soon. Business owners will still have to find their own reliable and affordable funding.
This is where the services of one of the business credit specialists at Credit Suite can be especially helpful. These specialists have their finger on the pulse of the small business lending industry. They can help borrowers make informed decisions based on that knowledge.
The Small Business Administration has had a tough couple of years as well. This is due mostly to the fiasco that ensued with the Paycheck Protection Program. A good idea that must be rushed is virtually guaranteed to have problems. The SBA was directly in the line of fire.
They are working to rectify it, but their role in small business lending will likely be smaller in 2022 than it has been in the past.
Not only are online lenders sticking around, but they will continue to offer more options as their role in business lending continues to grow.
The demand for business funding services that are less stringent when it comes to approval processes is stronger than ever. There are plenty of alternative small business lenders standing ready to fill the gap.
According to the 2019 Small Business Credit Survey 32% of small business applicants used online lenders, and that was before the pandemic. That number is very likely to grow in the coming year for a number of reasons. First, online lenders are typically more flexible. Also, they tend to offer a wider range of funding solutions, including:
Furthermore, they are usually faster and more efficient. Not only do borrowers get faster approval, but they typically gain access to funds faster as well. Not to mention, you can apply for funding with just a few taps on a keyboard.
It’s likely that this year and in the years to come, online lenders and other fintech companies will continue to provide lending solutions to small businesses.
There are a lot of well established online lenders out there, and new ones are popping up everyday. Be sure to vet each one carefully, and double check details before you apply, because they can change often. We have reviews on a number of them to help.
Here are a few you can start with:
With all of these choices, we highly recommend that you check their websites directly for the most recent qualifying and term details, as these can change over time.
If you need more of an alternative loan option rather than an alternative lender, a credit line hybrid may be a good option. This is a form of unsecured funding, and the Credit Suite Credit Line Hybrid has an even better interest rate than a secured loan. In fact, it can sometimes be as low as 0% for the first few months.
It’s a credit card stacking program, and many of the cards report to business CRAs. That means, you can build business credit and access cash for your business with no personal guarantee.
You do need a good credit score, or a guarantor with good credit, to get an approval. The minimum FICO is 680. There are no financials required, and you can often get up to $150,000. It is important to note also, some cards may report on your personal credit.
With increasing demand and competition for all types of business lending, building strong fundability will be increasingly important. Part of strong fundability is having a good business credit score. There are many ways to build your business credit score.
You need help from someone with inside knowledge of the industry and relationships with the vendors and lenders that can help you build your business credit. This makes the whole process go faster and keeps frustration to a minimum. A free consultation with a Credit Suite Business Credit Specialist is a great place to start.
The post Your Guide to Small Business Lending Trends In 2022 appeared first on Credit Suite.
The new year is a great time to review fundability. To do that, it’s important to have a fundable definition that you understand. Essentially, fundability is the current ability of your business to get funding. There are 125 factors that affect fundability. Some of them you can control, and some of them you can’t. Having a fundable business means you can get the funding you need for your business, when you need it.
The way your business is set up lays down the foundation for fundability. This includes a number of factors.
First, keep the name of a high-risk industry out of your business name. Maybe try Bobby’s instead of Bobby’s Gas Station. This will help prevent early denial from a lender that only sees the “gas station” part.
Another common reason for credit denials is that the lender can’t easily locate a business. So, name your business in a way that makes it easy to find both online and offline. The name on your application should be exactly the same as what is online and on your Secretary of State paperwork.
It also needs to be the same everywhere else. This includes corporation papers, licenses, utility statements, and bank statements. In fact, all business information needs to be consistent. That means, if you change your business name, you have to be sure to change it everywhere.
Even the smallest details make a difference. If you use an ampersand in one place and the word “and” in another, you are going to run into issues. If you hyphenate your last name on one document, then you do not on another, a red flag will go up.
Next, your business address needs to be a physical address where you can receive mail. Do not use a UPS box or a PO Box. A virtual address may work if you need to hold a meeting or an interview. In fact, it’s a lot more professional than meeting at your kitchen table. Still, not all credit providers will accept a virtual address.
Get a free EIN for your business at IRS.gov. This is an identifying number for your business similar to your personal SSN. Use your EIN to open a bank account and to build a business credit profile.
It’s important to incorporate. Incorporating creates a separate business entity, thereby adding a layer of protection between your business’s debts and actions and you. It doesn’t matter if you choose to do so as an S-corp, LLC, or C corporation when it comes to fundability. Work with an attorney or tax professional to figure out which option will work best for your budget and need for liability protection.
For fundability purposes, you need a separate, dedicated business phone number. A separate number keeps your family from accidentally answering a business call, and it means your listing will have the name of your business and not your own. It should be listed with 411. Many credit providers actually require this.
Toll-free phone numbers are best. Lenders see them as a sign of business credibility. Thankfully, it’s very easy and inexpensive to set up a virtual local phone number or a toll free 800 number. Don’t use your personal cell or home number. Instead, have your business number forward to your personal number. It’s also easy, and perfectly fine, to use VoIP.
Make sure you know what the licensing requirements are for your business at both the state and local levels.
Lenders and credit providers will research your corporation on the internet. Consequently, it is best if they learn everything directly from your business website. Not having a website can hurt your chances of getting business credit.
The website needs to be well put together and user friendly. If you can’t make it look professional, pay to have it professionally designed. It’s also important to pay for web hosting. Do not use a free service.
Along the same lines, you need a company email address for your business that has the same domain as your website. This is more professional than a free service URL such as Gmail or Yahoo. It also greatly helps your chances of getting approval from a credit provider.
You must have a separate business bank account. The IRS frowns on mixing business funds and personal funds anyway. Separate accounts make it easier to keep funds separate. Beyond that, the date you open your business bank account is the day that lenders consider your first day of business.
As a result, if you opened a business bank account yesterday, your business started yesterday. That’s the case regardless of how long you have actually been in business. Time in business is a major factor for credit providers when it comes to approvals, so this is important.
A separate business bank account also means you can sign up for a merchant account, so you can take credit cards. Study upon study has shown that people will spend more if they are using credit rather than cash.
You’ll need a D-U-N-S number. You can get one for free on the Dun & Bradstreet website. You cannot have a business credit score with D&B without this number. Since they are the largest and most commonly used business credit reporting agency, a D-U-N-S number is essential.
Once you are in D&B’s system, search Experian and Equifax’s sites for your business as well. You’ll have an identification number from Experian as well. It’s called a BIN, but Experian assigns that number. You do not have to apply.
You can control the way your business is set up. That’s good, because it is a huge piece of fundability. In contrast, the rest of the factors that affect fundability are not quite as controllable.
Still, you have to understand exactly what else affects the fundability of your business if you hope to get a handle on it.
There are other business data agencies that affect reports indirectly. This is in addition to the business credit reporting agencies that directly calculate and issue credit reports.
Two examples of this are LexisNexis and The Small Business Finance Exchange. These agencies gather data from a variety of sources, including public records. They even have access to information relating to automobile accidents and liens. You cannot access or change the data the agencies have on your business. However, you can ensure that any new information they receive is positive. Enough positive information can help counteract any negative information from the past.
Your credit history has everything to do with your credit score, a huge factor in fundability. Personal credit history consists of a number of things including:
But with business credit, the main issue is whether you’re paying your bills on time.
The point is, the more accounts you have reporting on-time payments to the business credit reporting agencies, the stronger your business credit score will be.
Both your personal and business tax returns need to be in order. It is best to have an accounting professional prepare regular financial statements for your business. Having an accountant’s name on financial statements lends credence to the legitimacy of your business.
Often tax returns for the previous three years will suffice for personal financials. Honestly, it’s best to have a tax professional prepare them. Now, this is the bare minimum you will need. Other information lenders may ask for include check stubs and bank statements, among other things.
There are other agencies with data relating to your personal finances as well. For example, FICO is where most traditional lenders will look for personal credit. Your personal FICO score needs to be as strong as possible.
ChexSystems is another example. They track bad check activity and their report makes a difference when it comes to your bank score. If you have too many bad checks, you will not be able to open a bank account. That will cause serious fundability issues.
There are other bureaus with all sorts of information on you, like:
All of this can and will play into the fundability of your business.
Your personal credit scores from Experian, Equifax, and Transunion affect fundability as well. If your scores aren’t great right now, work on them. The number one way to get a strong personal credit score or improve a weak one is to make payments consistently on time.
Monitor personal credit reports frequently to make sure the information is correct and current.
Did you know that even the process of applying for a loan can affect fundability? For example, consider the timing of the application. Maybe you paid off a large account recently. The payoff will increase your score. However, that may not be reflected on your credit reports immediately. It may be best to wait to apply until after the account shows as paid.
Also, your business name, business address, and ownership status need to be verifiable. Lastly, make sure you choose the right lending product for your business and your needs. For example, do you need a traditional loan or a line of credit? Would a working capital loan or expansion loan work best for your needs? Choosing the right product to apply for can make all the difference.
Obviously It can be difficult to get a handle on a fundable definition. This is mostly because the entire idea of fundability is so overwhelming.
Imagine, it is affected not only by the decisions you make today, but also decisions you made in the past. Not to mention, there are things that affect fundability that you do not have any control over. Understanding exactly what fundability is and what affects it is a great start to getting your business in a good position.
The post 2022 Guide to Fundability and a Fundable Definition appeared first on Credit Suite.
A credit plan for 2022—or for any year, is a way to better organize a necessary task, which is building business credit. A plan will help you save time and money. And you’ll avoid the frustrations of denials and delays.
It’s not one size fits all. There are measurable, qualitative differences between startups and seasoned businesses. And there are differences between businesses with just a year in business, and those with five years or more. We call these phases. Your options for credit and financing differ depending on phase.
You could conceivably just apply for credit willy-nilly. And you could hope that you’re doing it right. But a plan helps you bypass unnecessary delays. And it keeps you focused. Your eyes stay on the prize.
Every business begins as a Startup, phase 1. Your business might be just barely squeaking by. Once you’re past the startup stage and making money, you swing into Development, AKA phase 2. Now you’re making some money steadily. The Growth segment of your business’s life is phase 3, where you make more steady money and can afford to look past the next quarter or year.
Phase 4 is Maturity, where your business makes good, predictable money, hiring people, and expanding with ease. In this phase, you’re way past hanging by a thread. The final phase is 5, Exit. Here, you look to pass your business on, whether through sales or willing it to your heirs.
Where do you see your business in, say, a half a decade, or more?
All these scenarios require funding! Even going concerns with stable, steady revenue can experience emergencies, or need to seize a business opportunity quickly and before they have the funds. All businesses can use business credit to achieve their aims. Even if you’ve already been through some phases, checking out earlier phases could help you see if you missed anything. And if you’re just starting out, reviewing later phases could show you your business’s future so you can be prepared.
Setting up a business is a lot more than just saying you’re in business. The way the business is set up can directly affect the ability of your business to succeed. This first phase covers your first six to twelve months or so of existence. Let’s start with your brand new startup’s fundability
.
Fundability is a business’s ability to get funding. Much of the power to get business money is in your hands. A business starts with no credit profile. But nearly half of all companies fail in their first 5 years, and about 2/3 in the first 10. This means that new businesses don’t seem fundable to lenders. You can change that by building for fundability from the jump.
Let’s start with your business name. Always check with your Secretary of State—the name may have to be unique. Make sure your SOS has all necessary, up to date, and correct information for your company. Make sure that you are in good standing with them, and your entity is active. You have to file annual reports and pay an annual fee to stay active.
Keep the name of a high-risk or restricted industry out of your business name. Your business can be Amy’s rather than Amy’s Cannabis Dispensary. There is nothing underhanded about this. It is completely legitimate and honest.
A common reason for loan and credit card application denials is the lender can’t easily locate a business offline or online. So make it easy for lenders and credit providers to find your business. Make sure the business name is identical on corporation papers, licenses, utility statements, and bank statements. Also make sure the business name and all other information is the same on every online listing you can find. Keep it identical on all offline listings as well.
Your business must be a real brick and mortar building, a deliverable physical address. Hence it can never be a UPS box or a PO Box. Some lenders do not approve and fund unless this criterion is met. A virtual address can also be a good idea if you need to hold a meeting or an interview, as it’s a lot more professional than using your kitchen table. We like Regus, Davinci, and Alliance Virtual Offices. But keep in mind there are credit providers that do not accept virtual addresses.
Get a free EIN for your business and choose your business entity at IRS.gov. To truly separate business credit from personal credit your business must be a separate legal entity, not a sole proprietor or partnership. Only incorporating creates a new and separate entity. By default, this reduces your personal liability. Other entities (like partnerships) don’t. File with the Secretary of State for your state. Set up your entity in the same state as your business address.
The IRS website is also where you choose the NAICS code for your business. NAICS codes help the government collect, analyze, and publish statistical data on the business economy. For example, per the NAICS, the 484230 code covers Specialized Freight (except Used Goods) Trucking, Long-Distance. The 484110 code covers General Freight Trucking, Local. A trucking company which performs both functions could technically go with either code.
Neither 484230 nor 484110 is on the NAICS list of high risk and cash-intensive businesses. But that list is from 2014. According to the NAICS, they don’t have any current plans to update the list. High risk NAICS codes can affect your ability to get traditional loans, but other providers may be able to look beyond them.
It’s easy and inexpensive to set up a virtual local phone number or a toll free 800 number. A cell or home phone number as your main business line could make your business less fundable—but a VOIP is fine. And if you don’t want customers calling you on the road all day, do not use a personal cell phone as the business phone number. It also helps with fundability to have a dedicated business phone number. Your number needs a listing with 411 for most credit issuers and lenders to approve you. Check for your record to see if you’re listed and your information is accurate. No record? Then use ListYourself.net to get a listing.
Lenders and credit providers research your corporation on the internet. It is best if they learned everything directly from your corporate website. Because not having a professional website can hurt your chances of getting corporate credit. A Facebook page or a listing on Yelp is no substitute for an actual company website. You can buy web hosting from a hosting company like GoDaddy or HostGator.
Try to make your domain the same as your business name. Add a company email address on the same domain as your website. This often comes from a website domain provider, and may even be free with your hosting package. This is not just professional; it also greatly helps your chances of getting approval from a credit provider. Do not use Yahoo, AOL, Gmail, Hotmail, or similar kinds of email.
Contact state, county, and city government offices to see if there are any required licenses and permits to operate your business. Licensing requirements differ depending on state, town, and industry. Being fully licensed builds credibility in your business, and that can help you get more customers. Not being licensed can mean fines, and maybe even jail time. Don’t risk it and get your licensing!
You must have a bank account devoted strictly to your business. The IRS does not want you commingling funds. Make accounting easier and reduce the risk of audit at tax time. Keep personal and business funds separate. Having a business-only bank account makes that easy. Many vendors require that you open a business-only bank account. Use your EIN to open a bank account and to build a business credit profile. And while you’re at it, get a merchant account so you can accept credit cards from your customers.
Start with Dun & Bradstreet because they are—by far—the largest business CRA. Run a search for your business on D&B’s website. If you can’t find it, then you’ll need to get a free D-U-N-S number on the D&B site. A D-U-N-S number plus 3 payment experiences leads to a PAYDEX score. So you need a D-U-N-S number to start building business credit, plus it is another common vendor requirement. Once you are in D&B’s system, search Experian and Equifax’s sites for your business.
You get the most favorable funding by paying all bills on time, which means:
For Experian, historical behavior (payment history) is 5—10% of the total score. So make paying your company’s bills on time a cornerstone of your business credit building efforts.
Start with vendor accounts, a proven way to start building business credit. Vendor credit is generally not attached to a bank. So under federal law a Social Security number is not required. This is unlike bank loans and bank cards. So you can legitimately leave the SSN field blank, to force them to pull your business credit under your EIN.
Check out three of our favorite starter vendors for any industry:
All three report positive payment experiences with your company.
Reports to Equifax and Credit Safe. They had been reporting to D&B up till December 2020 but stated that they are working to restore that. Get low price electronic, and quality custom design and branding services. With The CEO Creative, you can create your own logo, business cards, business accessories, etc.
Membership fee includes access to all their products, and member discounts. Get access to web printing and graphic design at a discounted rate. You must pay an annual fee to run your business credit report and maintain monthly reporting. Membership fee is not reported to credit bureaus. Minimum order of $40 to report. Remember: reporting to D&B is on hold right now.
Your corporate entity must be in good standing with the applicable Secretary of State, and you must have an established business credit history. You also need:
You must pay a yearly membership fee of $69.00. Apply online or over the phone. Terms are Net 30.
They sell hardware, power tools, and more. And they also do fleet maintenance. They report to Dun and Bradstreet. In addition to their standard qualifications, if a business doesn’t have established credit, they want to see additional documents like accounts payable, income statement, balance sheets, etc. Terms for Grainger Industrial Supply are Net 30, Net 45, Net 60, or Net 90.
Your business entity must be in good standing with Secretary of State. You also need:
Your business must be registered to Secretary of State (SOS) for at least 60 days. Apply online or over the phone.
They sell shipping, packing and industrial supplies. Uline reports to Dun & Bradstreet and Experian. You MUST create an account with them before starting to build business credit with them. Terms are Net 30.
Your business entity must be in good standing with the Secretary of State. You also need:
Application may be approved for net 30 at time of order. Upon final review, Credit Department may change to a few prepaid orders before granting Net 30.
The idea is to help you qualify for business credit with cards that you will use. As you continue building, more time in business helps. But to get started, you may need to give a personal guarantee. That’s okay; that’s a part of the strategy.
When you provide a personal guarantee, you are adding your Social Security number to the application. So expect a hard inquiry. You’re also adding the details of your personal income to the application.
If you already have good personal credit, then you’re all set. But if not, you can work with a credit partner or guarantor. And never stop improving your personal credit, no matter what your FICO score is.
This is a form of unsecured funding. Our credit line hybrid has an even better interest rate than a secured loan. Get some of the highest loan amounts and credit lines for businesses. You can get 0% business credit cards with stated income. These report to business CRAs so you can build business credit at the same time. This gets you access to even more cash with no personal guarantee. You need a FICO credit score of at least 680 or a guarantor with good credit to get an approval. No financials are necessary.
This is not a loan. You do not have to pay an early withdrawal fee or a tax penalty. You put the money back by contributing, just like with any 401(k) program so you won’t lose your retirement funds. The IRS calls this a Rollover for Business Startups (ROBS), which is a separate entity with its own set of requirements. The plan, through its company stock investments, rather than the individual owns the trade or business.
This financing isn’t a loan against, your 401(k), so there’s no interest to pay and does not use the 401(k) or stocks as collateral. Instead, this is simply a movement or change of custodian. Your 401(k) must have over $35,000 in it and cannot be from a business where you are currently employed. You can get 401(k) financing even with severely challenged personal credit.
Some lenders make loans using securities (like stocks and bonds) as collateral. Securities-based lending provides ready access to capital. The only restrictions to this kind of lending are other securities-based transactions, like buying shares or repaying a margin loan. You continue to earn interest on stocks pledged as collateral. But you will have challenged personal credit.
Your business and its potential are assets. Selling off some business equity can take a few different forms. This depends on how much control you’re comfortable with ceding.
So talk to people you know about angel investing. Angels buy a smallish stake in your company. They usually don’t expect as big a return as venture capitalists do. VCs might also buy a stake, but they generally just want paradigm-changing businesses. Most straightforward industries won’t fill the bill unless your take on the industry is utterly unique. Another way to sell part of your equity is to take on another founder or partner.
Crowdfunding success isn’t guaranteed. And crowdfunding platforms like Kickstarter take a percentage of any money you raise. But it can still be a way to get a cash infusion without giving up equity. If you’re exceptionally good online and have a compelling service and story, then you’re more likely to succeed than most people. Since crowdfunding campaigns are time-consuming, don’t start one unless your realistic chances of success are better than half.
Grants can come from the government or private businesses. So expect a lot of competition, difficult entry requirements, and not a lot of money. But it’s another way to get some cash without selling a chunk of your business. You may find there are few grants for your industry. But you still may be able to score grants based on the kind of entrepreneur you are, e. g. female, disabled, LGBTQ+, etc.
Right now, you have minimal Growth Monthly Revenue (GMR). So this is a fast paced growth plan. Throw it against the wall and take what you can get right now. Look at some short sighted daily and weekly goals for quick cash and growth. During this phase, your focus is on the essentials to create a viable business. Your goal is to build your consistent revenue to $10,000 per month and continue to improve your personal credit. Let’s move onto phase 2.
In Phase 2, start developing marketing. Currently, you’re at an aggressive sales pace adding nurture and longer sales cycles. Use medium term monthly growth planning (campaign to campaign). So it’s time for software implementation and system development. You’re building the blocks of how your business is going to be, now and in the future. This phase should run somewhere between the first 6—24 months from launch.
Your credit options multiply once you get to Phase 2, including:
As you continue to build exceptional business credit and pay your bills on time, credit providers trust you more. So you can get higher limits and better terms. And you can start to get business credit cards with no PG.
With no PG financing, you can continue building exceptional business credit and pay your bills on time. In general, any of the following eliminate the need to provide a personal guarantee:
Much like with any other kind of business borrowing, the more assurances you can give the lender, the better.
There are many vendors who do not report to the business credit reporting agencies unless you default. But they’re still a good idea, because credit can help you beyond business credit building. Not having to put up 100% of the costs of equipment or a building or anything else can help with budgeting. Credit can sometimes be the only way to take advantage of a limited time opportunity if you don’t have cash right now. And if your business credit cards offer rewards, cash back, or points, then using them is to your advantage
Vehicle financing can be a great way to get a business vehicle without having to wait until you can just pay cash for it. Note: business owners may be required to personally guarantee vehicle loans. And if you are a co-borrower, the loan most likely reports to your personal credit report. Some loans have a prepayment penalty. It is a good idea to have a loan proposal, detailing your business, loan needs, and financial statements. Here are a couple of vehicle financing choices from us.
Ford offers several commercial vehicle financing options. These include loans, lines, and leases to actual business entities and not sole proprietorships. Get a loan or a lease. Ford may ask for a PG if you are not approved on the merit of your application. Apply at the dealership. Ford reports to D&B, Experian, and Equifax.
Your business entity must be in good standing with the applicable Secretary of State. You also need:
Ally provides personal financing, but they also report to business credit bureaus. If your business qualifies for financing without the owner’s guarantee, you can get financing in the business name only. Ally reports to D&B, Experian, and Equifax.
Your business entity must be in good standing with your Secretary of State. You also need:
If you provide a PG, Ally does not report to the personal credit bureaus unless the account defaults.
Get a lease or a loan. You need most of the same things as you need for an Ally Commercial Line of Credit, except for a bank reference and fleet financing references. There is no minimum time in business requirement. Apply in person only; dealer will advise if approved or PG needed.
There are several tools that can help streamline managing small business finances. Options like Brex, Divvy, Expensify, Lola, and more are growing in popularity.
Brex and Divvy are business money management systems that integrate with your accounting software. You can track expenses and, depending on the level of service you choose, they also help with paying bills and controlling spending. Brex has a partnership with the FDIC and your funds are secure. Everyone that opens a Brex cash account gets a corporate card. Brex reports any payments to Dun & Bradstreet. Divvy reports to the Small Business Finance Exchange, which in turn provides data to all SBFE partners, including business credit bureaus.
In Phase 2, your funding options also increase, to:
An MCA technically isn’t a loan; it’s a cash advance based on the credit card sales of a business. A small business can apply for an MCA and have an advance deposited into its account quickly. So you can offer Net 30 terms but not have to wait a month to get paid. With an MCA you get funding based strictly on cash flow as verifiable per business bank statements. A lender mainly just wants to see consistent deposits.
You can technically qualify with only one year in business. But the annual revenue requirement is high enough that phase 2 should make more sense. You can raise capital from investors who get a percentage of the enterprise’s ongoing gross revenues in exchange for money invested until a predetermined amount is paid. Often this amount is between 3—5 times the original amount invested. Monthly payments fluctuate with revenue highs and lows and continue until you’ve paid back the loan in full.
Fundbox connects directly to your online accounting software when deciding to fund your business. You can get revolving line of credit for up to $100,000. Fundbox auto debits your weekly payment from your bank account. You don’t need to show a minimum personal credit score or a minimum time in business. But ideally Fundbox prefers 6 months in business or more.
Use a loan or lease to purchase or borrow hard assets for your business, equipment like a truck or a laptop. Pay predictable amounts every month. You can build business credit on a program like this.
Or you can lease equipment, rather than buy it outright. You often put down less money than if you were buying the equipment. You may be able to negotiate flexible terms with an equipment lease, and it’s easy to upgrade equipment after your lease ends. This is helpful if your equipment is something like a computer which quickly becomes obsolete.
If you already own your equipment free and clear, did you know that you can use that as collateral for financing? Sell the equipment to a lender for cash. And then lease it back from them. You can unlock Section 179 tax savings and depreciate your entire equipment purchase in the first year. You need at least one larger piece of higher value equipment to qualify.
If you have open invoices and extend credit to customers in some form, then you can get paid faster with factoring. Often this involves invoices with net terms, like net 30, 60, or 90. To be paid faster, turn those invoices over to a factoring company. They immediately give you an agreed upon percentage of the total of the invoices, like 80%. When your customer pays, the factoring company keeps their fee. Then they send you the rest. But never forget—factoring only works if your customers pay.
Goal #1 should be strong business credit (10—12 accounts) and good personal credit. You also want to build consistent revenue to $10,000 or more a month. Always develop business connections in your community and with potential lenders. Let’s move onto phase 3.
Now you’re in a time of successful growth…what you’re doing is working! It’s time to start optimizing systems and operations. You’ll undergo massive team and infrastructure development. Plus long term growth and planning for a semi-annual to annual focus on lifetime customer value. You need to make some high level strategic hires (Managers, VP’s, Essential C levels). This phase happens at about 24 months or more from launch.
Your Phase 3 credit options put your Phase 1 and Phase 2 options on steroids, with:
Phase 3 opens your funding options up to:
This can often mean online lending. For certain industries, it is one of the only ways to get money. Before you dip into your savings, investigate business lending for your industry. Because lenders that specialize in lending to your industry are out there.
More time in business also makes SBA loans a real possibility for your business. It’s easier to get an SBA loan in Phase 3 versus earlier. This is because you can more readily show your business is established and making money. Demonstrated profitability and responsible credit and bank account management improve your chances of getting an approval for an SBA loan. SBA loans have great terms, which is why you should be striving to be eligible for one.
Big banks only sign off on about 25% of the small business loan applications they see. Term loans often have lower interest rates than many other funding options, and also tend to be for higher loan amounts. Most likely, you must undergo a personal credit check and/or provide collateral.
In Phase 3, you take your business to the next financial level, so your goals are:
You can get retail credit comes from major retailers. Retailers check if your business information is uniform everywhere, and if your business is properly and thoroughly licensed. Terms can be revolving. You need at least 3 accounts reporting to the business CRAs.
Use fleet credit to:
These tend to be gas credit cards. There may be a minimal time in business requirement.
Business credit cards are more universal-type credit cards, like MasterCard. So you can use them pretty much anywhere. These cards may even have rewards programs. Terms can be revolving. Often you need to have at least 14 accounts reporting to the business CRAs. There can be longer time in business requirements. Let’s move onto phase 4.
So consistent growth is key. Now you’re aiming for long term consistent and stable growth and moving toward market domination. This can include competitor buyouts and acquisitions. Product development and expansion becomes critical for longevity. Now it’s time for the big hire. You get to fill out C Level, Directors, and middle management. Yes, your business can become this big! This phase can happen at around four to five years from launch.
So now, the sky is pretty much the limit! You should be able to get:
And you should be able to leverage reports for specific vendors. This includes asking for a credit line.
In addition to everything we’ve already talked about, your business can take full advantage of:
You might even sell shares in your corporation or go public!
So now you’re playing the long game. Your mission is to look to the future and help your business for decades to come. Therefore, you must:
So you should maximize and leverage of cash flow with vendors and business credit. Let’s move ahead to phase 5.
By now, your business should be very well established. Hence it’s time to cash in on all the work you have invested. Now your funding and credit has the long game return. A business credit portfolio is transferable and increases the value of your business.
Now your proven track record with merchant cash advances or revenue lending pays off big time, as it can keep your business cash flow moving through any difficulties. And a proven track record with the SBA, and a profitable banking relationship, also improves the value of your business. People want to buy something they can lend against if necessary.
Selling can mean you’re retiring, or maybe trading one form of entrepreneurship for another. Or you may want to change industries yet remain an entrepreneur. In Phase 5, you can:
In essence, you should be ready to sign for your own buyout. A profitable, seasoned business can be an exceptionally valuable legacy.
Your successful business will go through several phases throughout its lifetime. These phases dictate how you can best finance your business, and the kinds of credit you’re most likely to qualify for. Follow the steps in order and reap the rewards. Contact us today for a free consultation to see where you are in your journey, and what you qualify for.
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The NCAA announced that the women’s tournament will expand to 68 teams, starting in March. What does that look like? We project the field.
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EXCLUSIVE: Former President Trump slammed President Biden’s spending agenda as the “Green New Deal bill,” warning that, if passed, the American people will face tax increases, and the Democratic Party will lose dozens of seats in the House of Representatives during the 2022 midterms.