Tag: Fundability

The Fundability™ Roadmap: Your Business Credit Guide

Business credit is a journey, not a destination. The destination is Fundability™, and business credit is just one of many tools you need along the way. If you’re interested, our business credit guide can help any user ensure their toolbox is well stocked. 

Making this trip isn’t easy, but some routes are easier than others. We have the roadmap to starting Fundability™, but you have to trust the process.

Business Credit Guide: What is Fundability™?

It might help if we first define Fundability™. Fundability™ is the ability of any business to get the funding it needs. Obviously any business will be interested in funding for the purpose of improving and to grow. That is the way to success, and being Fundable™  means you have access to the money to do it.

Business Credit Guide: How Businesses Can Get Started

The first step, before you even open the roadmap, is also one of the most important steps in the journey. Think of it like choosing the most efficient and comfortable vehicle for your trip. It doesn’t take an expert to figure out some types of transportation are better than others.

Just like that, a Fundable™ Foundation gives you the best start not just with Fundability™, but with business credit as well. It will help you avoid issues that can slow down your ability to get approved for credit.

Businesses with a Fundable

  • Separate business contact information
  • EIN
  • They are incorporated
  • Business bank account
  • Licenses
  • Website and email separate from the founder

This is the easy part, but it is vitally important.

To be successful on the road to Fundability™, there is more than this to consider. The goal is to have lenders see your business and you as the owner as low risk. Here are some things to think about.

Your Business Name Makes a Difference

When developing your business name, it’s best to leave any indication of a risky industry out of it. This may not help you get financing, but it will minimize the likelihood of being turned down immediately due to being linked to a risky industry before you get a chance.

It’s also important for your company name to be consistent and in alignment everywhere. Even inconsistencies in small details, like using the word “and” sometimes and an ampersand at others, can indicate higher risk. Lenders are not interested in why there is an inconsistency. They will just deny it.

Get a D-U-N-S Number from Dun & Bradstreet

All entrepreneurs need a D-U-N-S number from Dun & Bradstreet for their organization. Set your business up for success by getting it as soon as you can. It is how Dun & Bradstreet will identify your business in their network and how your PAYDEX is linked to your business.

Business Credit Guide: Start The Journey

Once you have the foundation, or the right vehicle to make the journey, it’s time to get on the road. Making sure you are prepared is the only way to reach where you are going.

The foundation is definitely something you can control. After that, it’s time to start establishing and building strong business credit. This is only part of what makes a business Fundable™, but it is a big part. It’s important for most any type of company financing if you want to run a profitable business.

Business Credit Guide: Use Vendor Credit to Fuel Your Way to Becoming a Profitable Business

Now, it’s time to fill the car up with gas. That gas is business credit accounts that report payments to your business credit reports. It all starts with vendors. Not just any vendors however. Just like any journey, you have to start at the beginning.

Starter vendors are those that will give net terms on invoices. They are not as interested in credit scores, so you can get approved with less focus on that and more on other factors. Not only that, but they will also report the positive payment experience to the business credit reporting agencies. 

How Do You Get Starter Vendors to Grow Business Credit?

At Credit Suite we discuss vendors in terms of tiers. Starter vendors are those in Tier 1. Since most vendors do not classify themselves as such, how do you get them? A simple search will give you a few options.  However, how do you know if those vendors work with your company marketing and growth strategies? Furthermore, the information changes without warning. 

It’s Worth It to Get Help from An Expert

The answer to all of these questions is Credit Suite. Our product includes select vendors that we know report, and what they require for approval.

We also track changes with recommended vendors. So, if they change requirements or reporting standards in ways that make them no longer align with the values we have for our clients, we can adjust.

Maybe they now rely more heavily on personal finance data and need to be moved from Tier 1 to another tier. Maybe they decided to adjust their minimum business credit requirement. Perhaps they no longer report payments? All of these things will stunt business credit growth.

Credit Suite will check in with your business at each level in the process. We will discuss the risk you present to lenders, and determine what needs to be done in order to reduce that risk.

Credit Suite Can Save You Time and Money

Our processes allow us to keep our vendor database updated. Our industry experts have the skills necessary to help clients find the best vendor options for them. Whatever stage of the journey our clients are in when they come to us, we can help them find the vendors that can best help them be successful, with confidence.

Working with Credit Suite to find starter vendors and to figure out which vendors to apply for when is kind of like using help to find a gas station that’s open in the middle of the night. It lets you avoid paying more money than you have to for gasoline.

Our resources get you where you are going faster. Team recommended strategies save you both time and money, and one of the best benefits is your business can grow and transform along the way. Our team uses best practices to add value.

Business Credit Guide: Refill Your Fuel Tanks and Get Financing to Grow

Starter vendors are just the first fill-up a company makes to get on the road, but it will only get you so far before your check engine light comes on. As you move further into the process, you’ll need to get credit with more vendors and apply for business credit cards to continue to operate. You can’t just sit back and read a good book, you have to keep moving.

If you handle your approved credit responsibly, you’ll soon have enough accounts reporting to more easily get business credit cards. Even better, you should be able to get higher limits, better rates, and less if any personal guarantee. This is the best way to grow and increase earnings. There are no shortcuts.

Other Factors that Support Fundability™

Of course there are parts of the car you cannot see. There are curves and bumps in the road you may not be able to predict. As a result, things happen that you cannot control, making the trip quite uncomfortable at times. However, you can do your best to be prepared.

Here are a few things that can affect Fundability™, and thus your ability to get money for your company easily, that you have less control over.

Other Business Data Agencies 

In addition to the business credit reporting agencies that directly calculate and issue credit reports, there are other business data agencies that affect those reports indirectly. This can throw a kink in your business journey if you aren’t careful.

Two clear examples of this are LexisNexis and The Small Business Finance Exchange. These two agencies gather data on businesses from a variety of sources, including public records.  This means they could even have access to data relating to automobile accidents and liens. They share this information with their partners, some of which are business credit bureaus.

Fight Back With Positive Data

While you may not be able to access or change the data these agencies have on your business, you can be making sure you always use strategies to guarantee any new information they receive is positive. 

Enough positive data can help counteract any negative data from the past and reduce those risks over time.  Consequently, your personal risk tolerance with underwriters will be easier to overcome. This is how you start to see your company success grow.

Financial Statements

Lenders are going to ask for both personal and business financials. They want to see income and profit. They need to know you have the money to pay back any financing you get. The numbers are what they are, and underwriters will verify them. Don’t try to create a false idea about money, whether personal or business. It is not worth the risk.

Bureaus

There are other agencies that hold data related to your personal money as well. Take ChexSystems for example . This agency keeps up with bad check activity. That makes a difference when it comes to your bank score, your ability to open a checking account, and definitely Fundability™.

Personal Credit History

Personal credit can affect business credit. Not only do many lenders consider owner credit background alongside business credit, but some business credit reporting agencies use your personal credit score in their business credit score calculation.

Business Credit Guide: The Road Goes on Forever

You never stop building business credit. But, after a point you will want to keep your progress at a steady pace. Just don’t stop. That’s where many businesses go wrong. Business credit that isn’t growing is doing nothing. They do not understand that, the only option if you want to stay successful, is to continue to use it. Then, be sure to let it keep growing.

Business Credit Guide: Credit Suite Can Be One of Your Best Resources

Interested in business credit and want to explore more about how Credit Suite can help you? We love to share how to utilize our products to launch your own business credit journey. We want to help businesses understand what we do and how we can help them. 

Check out our free business finance assessment now. We will discuss and explore where your business is currently, so we can best learn how to help you. We’ll work to understand what you need, and help you determine what your next steps should be. 

The post The Fundability™ Roadmap: Your Business Credit Guide appeared first on Credit Suite.

Why Is Inflation Bad? Personal Credit Issues and Business Fundability

Why is inflation bad? The simple answer is high interest rates. They affect everything. Money doesn’t go as far, borrowing is more expensive, and everything is harder. Personal credit can be finicky, and inflation doesn’t help. It is subject to a lot of different factors. There is much more to it than just paying your bills on time. Inflation can wreak havoc on personal credit, and that can, in turn, cause serious issues with your ability to get business funding.

Why Is Inflation Bad? The Effect on Personal Credit

These are some of the factors that can affect business credit.

  • Age of accounts
  • Account Mix
  • Debt-to-Credit Ratio
  • Inquiries
  • Payment history
  • And more!

As you might have guessed, this means that even if you pay on time every time, you can still have a less than great personal credit score. Still, how does inflation affect these factors? More so, how can issues with personal credit affect business funding?  Then, what can you possibly do about it?

Personal Credit Issues that Can Kill Business Fundability

First, you need to understand which personal credit factors can also affect Fundability. Here are 5 Factors that can affect your personal credit and your ability to get business funding.

Lack of Open Credit

This is the big one. It deals with the debt-to-credit ratio. That is, how much credit you are using versus how much you have available to use, in total.

For example, imagine you have 5 credit cards with a $1,000 limit each. That means you have $5,000 in total credit available to use. Now, if you put $900 on each one, your ratio would be $4,500/$5,000, or .9.

As a result, you are using 90% of your available credit. For an optimal credit score, it needs to be less than 30%. This will especially be an issue if you are using personal cards for business funding.  Typically, personal cards have lower limits than business cards. Furthermore, business expenses are usually more than personal expenses. So, even if you make payments, your balance could hover near credit limits.

Why is inflation bad? Higher interest rates mean higher minimum payments with less going toward the principle. Consequently,  it is harder to get balances down and keep them down to a more positive debt-to-credit ratio.

Open Charge Offs

If a bank sees open charge offs on your personal credit report, they are going to question your ability to make payments. This can cause them to deny or limit the amount of funding they approve.

Why is inflation bad? With the reduced ability to pay accounts off, more charge offs are likely.

Judgements and Tax Liens

The same is true for bankruptcy, judgements, and tax liens. These kinds of issues on personal credit can make credit providers call other things into question, such as your ability to run and manage a business.

Why is inflation bad? Higher interest rates make it hard to pay obligations, which can increase the likelihood of financial problems, including bankruptcy.

The Relationship Between Business Credit and Personal Credit

How exactly does personal credit have any bearing on business credit? The truth is, at least two of the business credit reporting agencies use your personal credit score when calculating your business credit score. As a matter of fact, both Experian and FICO SBSS do this.

However, when set up properly, the reverse should not be true. Credit in the name of your business should not affect your personal credit score.

What’s the Solution?

First, fix your personal credit issues. Pay down debt, and clear liens and judgments if you can. Bankruptcies only come off with time, but more positive marks will help. Start now, before inflation grows.

Build Business Credit

At the same time, start building business credit, if you haven’t already. Make sure your business has a Fundable Foundation, and start applying for and using vendor credit.

Having business credit will help you get funding to grow and run your business day to day without depending on personal credit.

Work with a Credit Partner or Guarantor

This is someone who has good personal credit that can help you get credit for your business using their good credit score. One way they can do this is by helping you get financing through the Credit Suite Credit Line Hybrid. The Credit Line Hybrid is unsecured business financing that you need good credit, or a guarantor with good credit, to get. Better yet, you can get up to $150,000.

Don’t Wait, Start Now Before Inflation Gets Any Worse

Building business credit at the same time you are working on personal credit can keep you going. Eventually, you will have both good personal and business credit. Truly, the sooner the better. Not only will you be better able to weather the inflation storm on the horizon, but you can also double your funding options.

Then you will be able to get even more money by using both your personal credit and your business credit.

The post Why Is Inflation Bad? Personal Credit Issues and Business Fundability appeared first on Credit Suite.

How Fundability® Affects Funding for Law Firms

funding for law firms

When you consider hanging your shingle and starting your own law practice, you have to think about a lot of things.  One thing you may think about is funding. Every business needs funding. There is no business in the world that can run without money. 

So, how do you get the business funding you need when you need it?  You may think a legal practice would have no problem getting funding.  However, even a law firm has to be fundable, particularly because rainmaking can take time — and it isn’t always dependable.  Strong fundability is necessary for any business to get financing. 

There is an added benefit for legal practices when it comes to fundability. Fundability aligns rather closely to all of the little things a firm does to attract, impress, and retain clients.

How Does Fundability Affect Funding for Law Firms? 

When you are just starting out with your own practice, clients may be few and far between. Not only that, but the cases you get are not likely to be huge.  You need a way to make payroll and pay other bills and obligations until cash flow catches up.  This is where fundability comes into play. 

Fundability is any business’s current ability to get financing.  Now, don’t make the mistake of thinking that you’ll be able to get the funding just because of the type of business you own.  It may help.  Still, before lenders approve funding for law firms, they want to make sure the business is fundable. 

Regardless of the type of business, there are 5 core principles of fundability that it must have.  Each core principle is affected by a number of factors. Sadly, many business owners never realize that those factors can affect their ability to get business funding. 

Funding for Law Firms: Even Law Firms Need to Build a Fundable Foundation

The fundable foundation starts where every foundation starts, at the beginning.  Likewise, it has everything to do with how you set your business up. 

Contact Information

A business needs its own phone number and address.  A business phone number should not be your own, even if you are a sole practitioner. You can use a separate line or VoIP and have it forwarded to your personal phone.  Just do not list your personal phone number as your business number.  

As for an address, it has to be a physical address where you can receive mail.  A P.O. Box or UPS Box will not work.  Of course a virtual office is an option. However, realize that some lenders will not accept a virtual office address. 

EIN

Your law firm needs an EIN as well.  Lenders want to see your business is legitimate and credible. If you apply for business funding and do not have an EIN, it looks unprofessional. Likely, this is even more true for an attorney.  The number is free and easy to get on the IRS website. An EIN has the added bonus of keeping your personal Social Security number private.

Incorporate

Of course, attorneys know the importance of incorporating for liability purposes. But, incorporating your business is an important step in separating a business from the owner personally which also increases fundability. The state you are in will determine which type of corporation is allowable for legal practices. In California, for example, if you opt to become a professional corporation, liability protection will not cover acts related to professional malpractice. You could instead form a California Legal Liability Partnership (LLP) and you would not be vicariously liable for the malpractice of other members.

Other states, like Massachusetts, will allow a firm to become a professional legal liability corporation (PLLC). In the Bay State, a PLLC won’t protect you from vicarious liability for the malpractice of other members of the PLLC. And in Delaware, the term is LLC (they don’t use the term PLLC) although you can also create a Professional Corporation in Delaware. Both arrangements provide some protection. It will pay to compare the two types closing before deciding between them.

In general, creating a PLLC or LLC means the members must all be licensed to practice within the state of incorporation. Hence, unlike with other types of business incorporating, you wouldn’t be able to choose to incorporate in Delaware or Wyoming — unless of course your firm is in the applicable state and all of the members are admitted to practice there. Incorporation also must be done as soon as possible. A lot of lenders look for a minimum time in business, and generally they consider the start of business to be the incorporation date. 

Business Bank Account

You have to open a separate, dedicated business bank account.  There are a number of reasons for this.  When it comes to fundability, the key is that there are several types of funding you cannot get without one.  Many lenders and credit cards want to see a business account with a minimum average balance.  

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Licenses

If you do not have the necessary licenses to run your business, red flags are going to fly up all over the place.  Lenders do not lend to borrowers that they feel are not doing what they should.  In a legal LLC or PLLC, the members will all need to be admitted to practice in the applicable state.

Firms practicing in federally regulated fields (such as securities), will likely need federal licensure.

Website

These days, you do not exist without a website.  However, having a poorly put together website can be even worse.  It’s the first impression you make on many, including lenders.

Spend the time and money necessary to have a website that is professionally designed and works well.  Pay for hosting rather than usings a free hosting service.  Also, make sure it has the same URL as your website.  Don’t use a free service such as Yahoo or Gmail. In particular, free services may not have the kind of security you would need to maintain client confidentiality, anyway.

Another plus to having a professional website and email address(es) is they are an opportunity to establish a trusting relationship with your clientele.

Funding for Law Firms: Business Credit Reports

A business credit report is a tool to help lenders determine how creditworthy a business is, even law firms.  There are a few different sources, but the main ones are Dun & Bradstreet, Experian, Equifax, and FICO SBSS.  Since you have no way of knowing which one your lender will choose, you need to make sure all of these reports are up to date and accurate. 

Other Business Data Agencies 

In addition to the business credit reporting agencies that directly calculate and issue credit reports, there are other business data agencies that affect those reports indirectly.  LexisNexis and The Small Business Finance Exchange are two examples of this. 

These two agencies gather data from a variety of sources, including public records.  They even have access to information relating to automobile accidents and liens. While you may not be able to access or change the data these agencies have on your business, you can ensure that any new information they receive is positive.  Enough positive information can help counteract any negative information from the past. 

Identification Numbers 

In addition to the EIN, there are identifying numbers that go along with your business credit reports.  The Experian BIN is simply assigned by Experian.  But you do have to apply for a D-U-N-S number from Dun & Bradstreet. 

Dun & Bradstreet is the largest and most commonly used business credit reporting agency.  Every credit file in their database has a D-U-N-S number.  Apply for one through the D&B website. It’s free. 

Business Credit History

Your business credit history is what makes up your business credit score, which is a huge factor in the fundability of your business.  

Your credit history consists of: 

  • How many accounts are reporting payments?
  • How long have you had each account? 
  • What type of accounts are they?
  • How much credit are you using on each account versus how much is available?
  • Are you making your payments on these accounts consistently on-time?

The more accounts you have reporting on-time payments, the stronger your credit score will be. 

Business Information

Business information needs to be consistent. Something as small as using an ampersand in your business name on one document and the word “and” on another can cause an application for funding to be denied. 

A large number of loan applications are turned down each year due to fraud concerns simply because things do not match up.  Maybe your business licenses have your personal address, but now you have a business address. Do some of your credit accounts have a slightly different name or a different phone number listed than what is on your loan application?  

Inconsistency causes warning bells for lenders, and you may never know what the problem was. 

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Funding for Law Firms: Personal Credit Reports

Your personal credit score from Experian, Equifax, and Transunion all make a difference.  You have to have your personal credit in order because it will definitely affect the fundability of your business.  

Some business credit reporting agencies use your personal score in your business score calculation.  Of course, lenders may pull your personal score as well, regardless of what your business credit score looks like.   

Funding for Law Firms: Financial Statements

Both your personal and business tax returns need to be in order, and you need to be paying them. Tax returns aren’t the end of the story however.

Business Financials

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. 

Personal Financials

Often tax returns for the previous three years will suffice.  Again, it is best to have a professional prepare them.  Other information lenders may ask for include check stubs and bank statements, among other things. 

Bureaus

There are several other agencies that hold information related to your personal finances that you need to know about.  Everyone knows about FICO.  Your personal FICO score needs to be as strong as possible. It really can affect business fundability and almost all traditional lenders will look at personal credit in addition to business credit. 

ChexSystems is also in the mix.  They track bad check activity, which 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. 

Everything is fair game. Do you have a bankruptcy or short sale on your record?  What about liens or UCC filings? Yes, even these personal things can affect the fundability of your business. 

Funding for Law Firms: The Application Process

First, consider the timing of the application.  Is your firm currently fundable?  Next, ensure that your business name, business address, and ownership status are all verifiable.  Lenders will check into it.  Lastly, make sure you choose the right lending product for your business and your needs.  Do you need a traditional loan or a line of credit?  Would a working capital loan or expansion loan work best?  Choosing the right product to apply for is important. 

Putting together the Fundability Puzzle

Everyone knows the easiest way to put together a puzzle is to start with the edges and corners. These are the easiest pieces to find because of their straight edges.  Once in place, there is a framework within which to fit all the other pieces. 

The fundable foundation is like a puzzle framework. Even with a law firm, it’s easier to start building your fundability from the beginning, especially since many of the steps you need to take are what clients are looking for in a firm anyway. Similarly, the foundational pieces are easiest to find.  As a result, filling in the details of all the other principles goes much more smoothly.  Yet, many business owners do not even realize these pieces are part of the fundability puzzle at all. 

Funding for law firms is out there.  Making sure your firm is fundable assures you the best possible chance of getting the funding you need to grow and thrive.   

The post How Fundability® Affects Funding for Law Firms appeared first on Credit Suite.

How to Strategically Use Every Day Business Operations to Promote Fundability

The way you run your business, the day-to-day operations, affects everything. From your reputation with customers to even your ability to get funding, all of it can be affected by business operations. This is why you have to be strategic. 

Strategic Business Operations Can Promote Fundability

Most business owners do not realize this.  They know that how they run their business affects success. However, most don’t get that the details of day-to-day business operations can affect fundability. Things like: 

  • Licensing
  • Business bank accounts
  • Merchant accounts (or lack thereof)
  • Business website
  • Even tools used to manage money

All of these can affect the ability of your business to get funding. It’s not just whether your business is fundable or not. Certain aspects of how you run your business can actually promote the ability of your business to get funding, or fundability. 

Business Licenses

You may be thinking, ok, what’s the strategy here? Of course you need to have your business licenses. You may be surprised to know how many business owners never think to check licensing requirements.  That is,  until it is an issue. 

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 based on state, town, and industry. Always make sure you have the proper licensing for your corporation. You don’t want the first time you consider licensing to be when a lender brings it up. 

Business Bank Account

Some business owners start out trying to use one account for business and personal funds. But the best strategy is to have a bank account devoted strictly to your business from the beginning. If it’s too late to do it from the start, start now. 

First, the IRS wants to see business funds and personal funds separated. Having a separate, devoted business bank account makes that much easier. Also, your business banking history is important when it comes to fundability. Another reason this is important is one that few realize. The date you open your business bank account is the day that lenders consider your business to have started. 

Say you opened your business 10 years ago.  Then, 6 months ago you opened a business bank account.  If you try to get a loan today, the lender might consider you to have been in business for 6 months. The longer your business banking history, the better your borrowing potential is. Don’t wait to open a bank account just for your business. 

Here’s yet another way having a business bank account is a smart business operations strategy. Without one, you cannot get a business merchant account. Without that, you can’t accept credit card payments. Studies show people spend more when they can use a credit card. Even if you do not have a need for that now, you may one day. If you already have a business bank account, you’ll be ready. 

Web Domain and Professional Website

Yes, there is even a strategy for your business website and domain. First, you need a business website. Customers and lenders will be looking for one.  Then, pay for it to be professionally designed. It has to be user friendly, and you do not want it to look thrown together. If customers or lenders see an unprofessional business website, it will not help you. 

Next, pay for web hosting. A company like GoDaddy or HostGator is best. Try to avoid using free Weebly or Wix options. You want it to be your domain, not domain.wix.com. Your domain should be your business name, if possible. 

Lastly, you need a company email address for your business that is on the same domain as your website. Use a professional email address such as yourname@yoursite.com. A website domain provider such as GoDaddy will often provide this for you.  

Do not use Yahoo, AOL, Gmail, Hotmail or similar free email services. 

Business Money Management

Managing small business finances can be overwhelming. There are a number of tools that can help streamline the process. Options like Brex, Divvy, Expensify, Lola, and more are growing in popularity. Not only can they help you manage funds, but some of them can help you build business credit if needed. 

If you are a new business, it will be incredibly useful to choose a business money management tool that will also help you build business credit. There are not a lot that will do this, but there are a couple. 

Brex

Brex is a business money management system.  It works with your accounting software and allows you to track expenses. Depending on the level of service you choose, it can also help with paying bills and controlling spending. 

They offer a couple of options. The easiest way to use Brex for both managing finances and building business credit is to open a Brex Cash account. Note, this is not a bank, but rather a banking alternative. However, they do have a partnership with the FDIC and your funds are secure. 

Everyone that opens a Brex cash account gets a corporate card. It works just like a debit card, drawing from your Brex Cash balance daily. However, unlike a debit card, Brex reports these payments to Dun & Bradstreet, thus helping build your business credit score. That, in turn, helps to increase the fundability of your business. 

Since this card is secured by the balance in your Brex cash account, and limited to that balance, you do not have to worry about underwriting. They have other money management options as well for those who qualify.  

Divvy

Another business money management option that helps you build business credit is Divvy. It was formerly Bill.com. This company is very similar to Brex . In fact, in a direct comparison there are just a few differences. 

First, Brex charges $5 per card for additional cards to team members, unless you pay for the premium account.  Then you get unlimited cards. Divvy offers unlimited free cards. 

There are also differences in budgeting, reimbursement options, and software integrations. For example, Divvy integrates with Quickbooks Online and NetSuite currently. Meanwhile, Brex’s integrations with Quickbooks Desktop and Xero are said to be coming soon. 

Divvy also has an offline mode, and they do not currently offer the ability to trade in points for cryptocurrency. One other major difference is that Divvy reports to the Small Business Finance Exchange.

This is a data collection agency, not a credit reporting agency. Yet, they do provide data to their partners.  These partners include some business credit reporting agencies. By reporting payments to the SBFE, Divvy indirectly provides information to all SBFE partners. This can definitely help build business credit more quickly. 

You Can Strategically Use Business Operations to Promote Fundability

If you are careful in how you operate your business on a day to day basis, you can promote fundability. By handling certain business operations in an intentional and strategic way, you can increase your ability to get the business funding you need, when you need it. 

The post How to Strategically Use Every Day Business Operations to Promote Fundability appeared first on Credit Suite.

How Your Business Office Impacts Fundability

Some fundability elements are impossible to control. For example, time in business. You can only change that by staying in business. However, others can be controlled by you as the owner. One of the things you can control is how you set up your business office.

Factors Affecting Fundability

Truly, it can be overwhelming when you start to realize just how much affects the fundability of your business. In fact, there are 125 factors that affect fundability. They can be broken down into 4 main principles.

  • Foundation
  • Business Credit Reports
  • Financial Statements
  • Application Process

Still, most business owners realize that their business credit reports and financing statements affect their ability to get funding. Yet, few realize the actual process of applying for funding can make a difference. While many may realize that some parts of the way their business is set up can affect fundability, most business owners do not realize the depth of detail involved.

Foundation of Fundability

Your business has to be set up in a very specific way to build fundability. Each step is vital, and if you miss one, it could do more harm than you may think. For example, you need an EIN and you need to incorporate. This may or may not surprise you, but it probably makes sense.

What does not make sense to a lot of business owners, is the idea that much of what has to do with their actual business office can affect fundability. Details such as business name, business address, phone number, even website and email address can make or break your ability to get funding for your business.

Your Business Office and Fundability

When it comes to your business office and fundability, here’s what you need to consider.

  • The name of your business and whether it is consistent everywhere it is used
  • Your business address
  • Your business phone number
  • Business website and email address

Business Name: Risk

Yes, the name of your business affects your ability to get funding. First, it should not indicate that your business is one that is risky. If you are opening a business that is considered to be high risk by the lender, for example a travel agency, do not name it “Carla’s Travel Agency.” You can name it Carla’s, or anything else that does not make it obvious that this is a high risk business.

Honestly, it’s just a way to ensure that you make it as far into the process as possible without being denied for funding. Depending on the lender, they could deny immediately if they can see at a glance that the business is in a high-risk industry.

Business Name-Consistency

Your business name has to be consistent. If you list it one way on your application and it is different anywhere else, whether on your business card, your phone listing, your website, or the Secretary of State’s office, enders will likely deny.

In fact, even seemingly small details like using an ampersand in one place and the word “and” in another can cause denial. Inconsistency throws up a red flag for fraud. Unfortunately, a lot of lenders will not investigate.  Instead, they will just deny.

Business Address

The actual physical location of your office doesn’t matter as much as the address. Lenders want to see a physical address where you can receive mail. That means no P.O. Box or UPS Box. If you are homebased and do not want to use your home address, a virtual office can work.

Here are three virtual office providers we love:

If you go this route, keep in mind some lenders and credit providers will not accept virtual offices.

What if Your Area Doesn’t Have Virtual Office Providers?

Get creative! Consider talking with local business owners to find out what they do. There may be options for shared spaces. It might help to talk to local computer user groups too, or consider going out of state if you are close to the border. They may open more options, but pay attention to tax laws.

For example, neither Tennessee or Texas have state income taxes, but Arkansas does. Some border cities in Arkansas have exemptions, but others do not.

Not wanting to use your home address is understandable. Still, realize your address isn’t hard for anyone to get regardless. As a result, a virtual address isn’t a lot of protection. They can be a good option, but using one could limit your funding options somewhat.

Business Phone Number

You need a dedicated, separate number for the business only. It should be toll-free and listed in the 411 directory. Voice Over Internet Protocol (VoIP) is fine, and you can forward your business number to your personal phone if you want.

Business Website and Email Address

Stay away from free web hosting and email services. Your business website is your first impression on many, including lenders. As such, it should look good and work well. Of course, It should be user friendly also. It’s wise to hire a professional web designer.

Your business email address should have the same URL as your website. Often, email can be included in your hosting package. Do not use an account from Gmail, Yahoo, or any other free email service.

How Your Business Office is Set Up Impacts Fundability

How you set up your business office affects fundability. The good news is, this is a factor you can control. If you are already up and running, make any needed changes now. The sooner the better when it comes to building fundability.

The post How Your Business Office Impacts Fundability appeared first on Credit Suite.

2022 Guide to Fundability and a Fundable Definition

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.  

Fundable Definition: A Fundable Business Has a Foundation of Fundability

The way your business is set up lays down the foundation for fundability. This includes a number of factors. 

Business Name

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.

Business Address

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. 

EIN

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. 

Business Entity

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.

Business Phone and 411 Listing

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.  

Business Licenses

Make sure you know what the licensing requirements are for your business at both the state and local levels. 

Web Domain and Professional Website

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.  

Business Bank Account

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.

Get Set Up With the Business Credit Reporting Agencies

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.

The Foundation is What You Can Control

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.

Fundable Definition of Other Business Data Agencies

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.

Fundable Definition: Personal and Business Credit History 

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: 

  • How many accounts are reporting payments?
  • How long have you had each account? 
  • What type of accounts are they?
  • How much credit are you using on each account versus how much is available?
  • Are you making your payments on these accounts consistently on-time?

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. 

Fundable Definition: Financial Statements

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. 

Fundable Definition: Bureaus

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: 

  • Have you ever been convicted of a crime? 
  • Do you have a bankruptcy or short sale on your record?  
  • Do you have any liens or UCC filings? 

All of this can and will play into the fundability of your business. 

Personal Credit Scores and Reports

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.

Application Process

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. 

Get a Handle on a Fundable Definition

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.

How to Apply for a Business Loan and How it Affects Fundability

There are at least 125 factors that affect the fundability.  They can be broken down into 4 main categories. One of them is the Application Process.  It is important to understand how to apply for a business loan in order to have the best chance of approval. To do that,  you have to understand how the application process affects fundability.

Business Loan Application Process and Fundability

Did you know that even the way you apply for a loan affects your chances of loan approval? This is because the application process is a fundability factor. If you aren’t careful, you could be denied before you get started all because of a flub in the application process. Here is how to apply for a business loan to ensure that doesn’t happen.

Find out why so many companies use our proven methods to get business loans.

How to Apply for a Business Loan: The 8 Factors of Fundability in the Application Process

The Application Process principle breaks down into 8 factors. They include:

  • Timing
  • Lender negotiations
  • Application format
  • Lending product selected
  • Application Process and Fundability
  • Lender selection
  • Verifiable business ownership
  • Ability to verify business address
  • Ability to verify business name

Let’s break down each one and talk about exactly how they affect the fundability of your business.

Timing and Fundability

The first fundability factor under the application process principle is timing. This has to do with when you apply for the loan. For example, you may have just paid off a lot of credit card debt. You are looking to do some expansion work on your business building, and you go to apply for a business loan.

The problem is, the payoff will not show up on your credit report immediately. Even if you wait a couple of weeks the balances may still be on your report. To the lender, it will look like you have a lot more debt than you actually do.

The same is true of UCC filings, liens, bankruptcy, and anything else that may be on your credit report. Even if you know it is time for it to come off, it can take awhile. If it is still there when the lender looks, it could cause denial.

This is why it is vital to monitor your business credit and personal credit reports. Then, you can know exactly what is on them, and what is not. This will allow you to better time your application for credit.

Lender Negotiations

This is where having a good relationship with a lender that is familiar with your business and its industry is important. Applying for a loan with an institution you already do business with is helpful. A prior relationship can allow you insight to understand if you can negotiate with the lender.  For example, say you apply for a loan and get initial approval for $6000.  However,  you have a couple of credit card companies that you know are willing to extend substantially higher amounts. You may be able to share this with the lender and get approval for more.

Application Format

In this digital age, it may seem like applying online is always the way to go. It is certainly easier and faster. However, sometimes there are substantial differences in what is available if you apply in person or with a paper application.

For example, some lenders require a personal guarantee if you apply online. However, they have a paper application that does not necessarily require one. That’s just one example. There are any number of possibilities.

Find out why so many companies use our proven methods to get business loans.

Lending Product Selected

Choosing the right lending product for your business needs is vital. If you have a large project you want to complete, a business loan may be best. But, if you have a lot of smaller expenses and you just need to manage cash flow,  a credit card or line of credit may work better. When making a product choice, consider if you will pay off the balance monthly. If so, take note that a line of credit begins charging interest immediately.   In contrast, if you pay off a credit card before the billing cycle is up, you will not pay interest.

Lender Selection

The lending industry ebbs and flows, but not all lenders ebb and flow on the same wavelength. Some lenders may loosen their belts and lend more around the end of the year.  Eventually, they will tighten up again.  Chances are when they do, another group of lenders will decide it is time to increase lending. Knowing which lenders are lending more at the time of application can greatly increase your chances for approval.

Verifiable Information

The last three factors deal with verifiable business information on the application, such as:

  • Business Name
  • Business Address
  • And Business Ownership

When you apply for credit, you have to include your business name and address on the application. The lender will then search with the Secretary of State to make sure you are the owner.  Then, they will make sure your business phone number and business address match what is on file with the Secretary of State.

If they cannot find your business or verify the information, they may automatically deny. Alternatively, they may ask for tax returns.  That is, if they have not already. Even if they originally ask only to verify information, due diligence dictates that they look at the entire return.

The thing about tax returns is, businesses do not want to show they make money. Because of course, the more you make the more you pay. So, if your return shows a large loss, that could result in denial. This may not have been an issue if your information had been verifiable in the first place. They may have used other ways to verify profit, and tax returns may have not come into the picture. Still, if they have them for any purpose, they have to analyze them for everything.

How to Apply for a Business Loan:  Getting the Information You Need

The question now becomes, how do you know where you stand when it comes to these factors? How do you know which credit providers are lending more at the moment?How do you know what is still showing on your credit report? Can you find out if there are different options based on the application format?

Find out why so many companies use our proven methods to get business loans.

How to Apply for a Business Loan: Getting Help

Generally speaking, most borrowers can’t know without help. There are some things you can work on, like paying attention to your personal credit reports. Those are easy enough to monitor for free. But, what about business credit reports? Those aren’t free, though some monitoring options are cheaper than others.

Yet, lending trends, choosing the best lending product, and thinking of all the things that need to be consistent and verifiable for a lender to not deny you are much harder to determine on your own. Those are all things you definitely need help with.

This is where the business credit specialists at Credit Suite can really help. We are in a unique position to be able to see the big lending picture throughout the year. Our finger is always on the pulse of the industry, so we can help direct you toward lenders that are lending the most at the moment. We are able to see what options people are getting with various lenders based on how they apply.

And we can help you set your business up in a way that your information is verifiable and consistent. Then credit providers can see your business the way they need to see it for approval, and inconsistent details will not have to cost you funding.

How to Apply for a Business Loan: Fundability Matters

There are so many things that affect your fundability. It can be very difficult to keep track. Worse yet, credit providers will not usually tell you why you were denied. So, you might never know what the problem is. The best thing is to continually work on building and maintaining strong fundability.

The post How to Apply for a Business Loan and How it Affects Fundability appeared first on Credit Suite.

How to Ensure Your Business Financials Promote Maximum Fundability

There are 125 factors that affect the fundability of your business.  They break down into more general core principles. One such area is business financials.

Business Financials and Fundability

It probably comes as no surprise that your business financials affect the fundability of your business. But, what are lenders looking for? Is it just income and expense? Do they want tax returns and financial statements?

Start With The Basics: What is Fundability?

Initially, it may help to remember exactly what fundability is. Put simply, fundability is the ability of a business to get funding. It encompasses a number of things. The business financial information is just one. Now, let’s break down each factor within this principle.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Business Tax Returns

For maximum fundability, lenders like to see at least 3 years of business tax returns. Some traditional lenders will not even consider an application without this.

Sometimes, these are the only financials they need to see. The longer your tax history, the better.  Of course, all tax returns need to be up to date and taxes paid. If you aren’t paying your taxes, lenders will not believe you will pay a loan.

Mainly, they will want to see that you are solvent. That means, you can meet your obligations. Even if  tax returns are enough, your fundability will be stronger if you can provide financial statements as well.

Business Financial Statements

A business financial statement includes a number of statements actually. At a minimum, most have a statement of income and expense, a balance sheet, and a statement of cash flows. Not surprisingly, they want to see that the business is profitable. With these reports, lenders can also make a number of calculations that will help them make decisions.

Typically, traditional banks have a credit analyst that does this. For new credit decisions, a credit analyst will compare financial statements for at least the past three years.

If they can get more financial history, that is even better. First, they will look for trends and patterns. Then, they will ask for explanations for major changes from one year to the next.  For example, if there is a sudden increase in debts or expenses, or decrease in the bottom line, they will question that.

Audited Business Financial Statement vs. Company Prepared Financial Statement

This is why audited financial statements provide even stronger fundability. These statements will already have notes explaining any major fluctuation.  Also, lenders view them as more reliable.

Of course, this makes it easier on credit analysts to make a recommendation and for underwriters to get their job done. Now, It does cost money to have financials audited.  Yet, the fee is tax deductible.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Also, you can save money by making sure you are organized and prepared. Auditors typically bill by the hour, so the easier you make it on them, the less cost it is to you.

Business Financials: Ratios

Lenders also look at certain ratios to help determine creditworthiness. These are some of the most common ones used.

Current Ratio

First, the current ratio can help you understand whether a business will be able to meet obligations even if the unexpected happens. It is calculated as total assets divided by total liabilities.

Consider this example.  If your business has $20,000 in assets and owes $10,000, the current ratio is 2:1. So, assets are double the amount of debt. As you might imagine, that looks good to lenders.

Quick Ratio

Another useful ratio is the quick ratio. This is similar to the current ratio, except it reduces total assets by total inventory. This is because you cannot turn inventory into cash immediately. It cannot really be used to pay obligations in the short term. If something happens and you need all the cash you can get from your assets immediately, inventory would not be part of that. For this ratio,  a healthy number is 1 or more.

Debt-to-Worth Ratio

The debt to worth ratio is calculated as total liabilities divided by net worth. Net worth is simply total assets minus total liabilities. This ratio tells you, and lenders, how much you owe versus how much you own. In other words, how much of the business is really yours, free of debt.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

The Big Picture of Fundability

The financials of the business, and all that goes along with them, are just a fraction of what affects fundability. In fact, when you consider out of 125 factors, 6 of them are related to business financials—a good 4.8 %.

Also, business financials are not the only financials that affect fundability. Other factors include:

  • Personal financials
  • Personal credit history
  • Data Agencies
  • And bureaus

If you take all of these into consideration, you end up at around 27%, or about one quarter.  The Fundability Codex below gives a good visual.

It’s important to note that not all fundability factors are equal. Honestly, some do affect fundability more than others.  Still, it’s easy to see that there is much more to fundability than just the business financial information. It’s true, having bad financials will get you denied by a traditional lender almost certainly.  But, having good financials doesn’t guarantee approval. Really, you need strong overall fundability. Are you wondering about the fundability of your business?  A free consultation with a business credit expert can help.

The post How to Ensure Your Business Financials Promote Maximum Fundability appeared first on Credit Suite.

Set Up Your Office Space for Maximum Fundability

Your Office Space is Key When it Comes to Achieving Maximum Fundability™

Did YOU know that even the way you set up your office space can make a difference? You could achieve maximum fundability™ for business financing. Or you might end up settling for little to no fundability™ and little or no financing.

The good news is that most variables surrounding your office space are well within your control.

What’s Fundability™?

Fundability™ is the ability of a business to get funding. This is everything from getting credit to business loans. Since every business needs money, it pays to enhance your fundability whenever and wherever you can. A great place to start is your office space.

Online and Offline Business Fundability™

Fundability™ matters in both the online and offline worlds. The way you set up your business will affect your ability to get money. We’ve all seen the consequences when business owners aren’t careful. Haphazard is not a good look in either of these two worlds. Let’s start with the online world.

Fundability™ in the Online World

These days, a lot of businesses start online. It may be a side hustle or a passion project. But there comes a time when you need an actual website. And it’s got to be an email address that doesn’t come from Gmail or Yahoo.

Fundability™ and Business Funding Applications

The better your fundability™ is, the better your chances for business financing. Let’s look at your online presence. That is, your email address and your website.

Business Lenders Use Online Information When Evaluating Applications

One place where lenders and vendors will be looking for your business is online. Even if they’re not checking out your online presence, they may still need to know how to order your product or service, or where to send praise or complaints. Your online presence is where they will find that information—or not.

Your Business Website

What happens if your family member or a friend built your website? Maybe that person has talent. But business websites differ from personal ones. A business website must be easy to navigate. It must answer customers’ questions.

You need more than a listing on Yelp or a Facebook page. A business website can affect your ability to get funding. But a poorly put together website that appears unprofessional will not help you with customers or potential lenders. It can even be worse than not having a website at all. Spend the time and money necessary to ensure your website is professionally designed and works well.

Styles differ. Prom photographers and construction companies differ. They have dissimilar sites and design sensibilities. But they both have Contact and About pages. And they both have information about what they do.

Business Fundability™ and Your Business Website: Details

Make sure you own your domain. It’s better than having just your domain at Wix or WordPress or the like. You can do this by buying hosting. This is through hosting companies like GoDaddy or HostGator.

Get our business credit building checklist and build business credit the fast and easy way.

Your Business Email Address

With more lending decisions going on online these days, your email address is an opportunity for your business to puts its best foot forward. Don’t squander this easy and free opportunity! General email addresses like admin@yoursite.com tend to be best.

With a general email address, if someone leaves your employ, another employee can seamlessly take over that email address. A username like admin, webmaster, or even hello is far, far better than cutiepie or the like, even if you’re in a playful industry that caters to kids. After all, your bank and banker aren’t.

Maintain Online and Offline Business Fundability™ with Better Records Congruency

Always keep your records consistent! This includes your online records. Inconsistent records will lead to a denial due to fraud because that’s how lenders interpret inconsistencies. This is a cause of denials which is in the business owner’s hands. You have the ability to change and correct this.

This means your business name, address, phone number—everything!—must look the same in these places and more:

  • Every place your business has an online presence (your website, Yelp, SoTellUs, etc.)
  • Your business’s records with Dun & Bradstreet, Experian, and Equifax
  • All licenses necessary to run your business
  • IRS records
  • Incorporation documents

Copy/paste this information; don’t chance it with retyping.

More Online Business Fundability™

There are some aspects of fundability™ where you should pay particular attention to what’s going on online. They include:

  • Business owners listed and listed ownership uniform
  • Business name and address uniform
  • Industry alignment
  • Company domain
  • Information uniform on all records

More Online Fundability™: Business Ownership Listings

Records consistency matters here, too. Your website should show who owns your business. And that information must be consistent. So if you call an owner Susan Johnson on your website’s About page, then you can’t put Sue Johnson on your Contact page. If your business ownership changes, you must show that here.

More Online Fundability: Business Name and Address Uniformity

Abbreviations can be your downfall here, as can punctuation like hyphens, commas, and colons. If your Contact page says your main office is on Main Street, then your About page can’t say it’s on Main St.

Decide if you want to use the word ‘and’ or an ampersand (&) or a plus sign (+). If you need something like that in your business name, then pick one and stick with it! Yes, even this will make a difference.

If your business moves, or you add subsidiaries and other locations, then you must update that information everywhere. This even means whether you use your 5-digit ZIP code, or a ZIP plus 4 code (9 digits).

More Online Fundability™: Industry Alignment

If your business is over the road trucking, then it must have that kind of listing. Pro tip: when there are several different names for your industry, like long distance trucking, try to mention those other phrases on your website.

More Online Fundability™: Company Domain

When your company domain matches your business name, it helps with fundability™. Pro tip: try to match what people will be searching for online. Here’s an example. If the word ‘brothers’ is in your company name, then determine if people will use ‘brothers’ or ‘bros’ when searching for your company online. Let’s move onto offline fundability.

Get our business credit building checklist and build business credit the fast and easy way.

Fundability™ for Your Office Space in the Offline World

Records consistency matters with setting up an office from scratch, too. So does a professional appearance. You and your location can exude fundability™, or not. Let’s start with your phone number.

Your Office Space Set Up

The best home office setup makes your business a fundable entity separate from you, the owner. One early step is to ensure your business has its own phone number and address. That doesn’t mean you must get a separate phone line, or even a separate location. You can still run your business from your home or on your computer.

Business Phone Numbers and VoIP

You can get a business phone number that will work over the internet instead of phone lines. So use a VoIP, AKA a voice over internet protocol. The phone number will forward to any phone you want it to. So you can use your personal cell phone or landline if you want. Whenever someone calls your business number, it will ring straight to you.

Business Phone Numbers and the 800 Exchange

Lenders can see an 800 Number or toll-free phone number as a sign of business credibility. Even if you’re a single owner with a home-based business, a toll-free number provides the perception that you are a bigger company. It’s easy and inexpensive to set up a virtual local phone number or a toll free 800 number.

Business Phone Numbers and a 411 Listing

Your phone number must have a listing with 411. This is a prerequisite for most credit issuers and lenders to approve you. Check your record to see if you have a listing. Make sure your information is accurate. No record? Then use ListYourself.net to get a listing.

Your Business Address and Virtual Offices

One way to exude more fundability™ is with a separate site for your business, apart from your home. A UPS box or PO box will get your business flagged as unestablished. You need a brick and mortar address. But how do you get one for not too much money?

You can use a virtual office for a business address. A virtual office is a business that offers a physical address for a fee. They sometimes they even offer mail service and live receptionist services. There are some that offer meeting spaces for those times you may need to meet a client or customer in person. But keep in mind: not every vendor will accept a virtual address.

Virtual Offices

You can often get a great city address. There can be workspaces if you need them. And you might get access to conference rooms. Some plans include receptionists. A small business does not have to look small.

Our three favorite virtual office providers are:

What if Your Area Doesn’t Have Alliance Virtual Offices, Regus, or Davinci?

You may need to improvise. Consider talking with local business owners. Find out what they do. Perhaps there are shared spaces. It might be fruitful to talk to local computer user groups too.

Get our business credit building checklist and build business credit the fast and easy way.

What if You Need or Want a Brick and Mortar Location for Your Office Space?

As they say in the real estate business, your top 3 concerns are location, location, location. For a business, you want to be where your customers are. And you want to match your location with your business, as well as possible.

Hence a luxury goods seller should be in the ritzy section of town. And the seller of athletic gear could do well with a store near a college. How does this relate to fundability™? If your location makes you more money, your business will be more fundable.

Setting Up Your Office Space for Maximum Fundability™: Takeaways

You can improve your business’s fundability™. Setting up your office space properly will go a long way. Pay attention to the details of your website, email address, phone number, and business address. And make sure your records get and stay consistent to prevent funding denials due to perceived fraud.

The post Set Up Your Office Space for Maximum Fundability appeared first on Credit Suite.

Business Tax Returns And Fundability

Fundability is like a puzzle. There are many different pieces that make up the complete picture. Financial statements are part of that, both business and personal. Business tax returns are just one piece of the puzzle. 

The Basics of business Tax Returns and How They Affect Fundability

According to the IRS, except for partnerships, all businesses have to file an income tax return. There are different forms.  The one you need to use depends on the business structure you choose. In addition to partnerships, there are sole proprietorships, corporations, S-corps, and LLCs. 

Business Tax Returns for Beginners

If you are a new business owner, there are some things about paying business income taxes you need to know. They are not exactly the same as paying personal income tax. One of the major differences is that you may have to pay estimated tax.

Estimated Tax

Federal business income tax is pay-as-you-go.  You have to pay the tax as you earn or receive income.  

Sole proprietors and S-corps that expect to owe tax of $1,000 or more when they file their business tax return, will generally need to make estimated payments. For corporations, those that expect to owe $500 or will need to pay estimated taxes. 

Documentation

You are going to have to track expenses, asset purchases, income and more. The absolute best way to do this is to implement an excellent bookkeeping system from day one.  HIring a bookkeeper or bookkeeping agency is best.  If you cannot do this, at least choose one of the many great accounting software options available. 

With these options, you can print  reports at the end of each tax period.  Then just hand them over to your tax preparer. 

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Tax Preparation

Do not try to prepare tax returns for your business on your own.   Just hire a tax professional.  The cost will be well worth the time and money you save.  You reduce the chances of a mistake, and you have back up if your business has to undergo an audit. 

Note that your tax preparer should not be the same person as your bookkeeper or accountant. Whoever keeps the books should not do the tax returns. Larger corporations are not even allowed to have the same firm handle bookkeeping and taxes. With smaller businesses the same firm is ok, but it is not wise for the same person to do both. This helps deter and detect fraud.

This means, even if you have an in-house bookkeeper or accountant, they can prepare everything the tax preparer needs.  However, they should not complete the tax forms themselves.

Other Choices You Have to Make Before Filing Your First Business Tax Return

When it comes to filing tax returns for your business, you have some choices to make.  Discuss these with your tax professional thoroughly before making any decisions. 

Cash vs. Accrual

You will need to choose your method of accounting. You can choose either cash or accrual basis. With the cash basis, you count income as revenue when it is collected.  In the same way, you count expenses when you pay them. With accrual basis accounting, you record income when you earn it.  You count expenses when they are incurred. 

For example, using cash basis accounting, you don’t necessarily count revenue as soon as an item sells.  You count it when you get the cash.  That means, unless the buyer pays cash on the spot, you do not record revenue until the customer pays the invoice. You do not carry receivables on your books.  

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Using accrual basis accounting, you will record revenue when the item sells.  A receivable for the invoice will go on the books.. 

If your business is new, you may have more unpaid expenses and more uncollected income at the end of the year.  Then, it looks best for you to take those outstanding expenses as a deduction.  That’s accrual basis accounting. 

Yet, later on when your business is profitable, your outstanding receivables will likely be higher than outstanding expenses or payables.  If you are using the accrual method, you will be recording more net income and thus paying more in taxes under the accrual method. Consider this when making your decision.

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Once you decide which method to use, you will have to stick with it through the life of your business.  Although, there are exceptions that allow for changes to be permitted.  Also, certain businesses, like those with larger revenues or that carry inventory, do not have a choice.  They must use the accrual method. 

Depreciation

There are a few different options about depreciation.  Discuss this thoroughly with your tax preparer to ensure you are doing what is best for your business. The first choice will be about first year depreciation.  Typically depreciation on assets is written off over the course of 5 to 7 year. However, the IRS allows a first year deduction of up to $100,000 for equipment and most furniture instead.   This is an election most business owners take.

However, if you do not make a profit you cannot take the $100,000 deduction.  You can carry it forward to a year that you do make a profit.  

Early on, you might want to think about using the slower depreciation method.  Then, you can use the deductions later.  At that time,  there will likely be more income. You may be in a higher tax bracket than the startup phase.  The depreciation deductions may come in handy. 

The most important thing in making any tax decision is to discuss it with your tax professional. 

Business Tax Returns and Fundability Crossover

Fundability is, in the most simple terms, the ability of your business to get funding. For a business to be fundable, it needs to be fully recognizable as an entity separate from its owner.  There is a lot of crossover between fundability and business taxes.

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Fundability, Business Tax Returns, and Entity Type

Take the business entity choice for example. You can choose whichever you want for you taxes, but you do have to choose one. Generally, that choice will depend on your budget and needs for liability protection.  Your tax advisor will be able to help you decide.  However, the decision you make affects fundability as well.  

For fundability purposes, you do not need to operate as a sole proprietorship.  Your business needs to operate as a completely separate entity from you as the owner. To do that, you need to choose to operate as either an S-corp, LLC, or corporation. 

Fundability, Business Tax Returns, and the EIN vs. SSN Saga

If you are operating as a sole proprietor, it is possible to use your SSN to file your business tax return. For fundability, you should not file a business tax return using your social security number. This is also a vital part of setting your business up to be fundable. You need an EIN. You can get one for free at IRS.gov. 

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Business Bank Account

To fully separate your business from yourself as the owner, you need to have a separate, dedicated business bank account. This is also helpful for tax purposes.  It makes tracking business expenses much easier. 

What Lenders are Looking for in Business Tax Returns

Why and how do business tax returns affect fundability? There are many factors that affect the overall fundability of a business.  Credit Suite identifies 23 core principles of fundability.  We  break these down further into 125 fundability factors.  Business financials is one of the core principles of fundability.   Business tax returns are one of the factors included in this principle.

Lenders want to see that you pay your taxes, and that you are reporting things accurately to the IRS.  They may not always request business tax returns.  Still, if they do and you do not have things in order, it will definitely cause a problem.

Even if they do not request tax returns, they may do various background checks on your company.  If they turn up that you aren’t handling your taxes responsibly, it won’t bode well for your ability to get funding. 

Business Tax Returns Are Only One Piece of Fundability

Some factors affect fundability more than others.  For example, consider if your business taxes are in order, but your business credit score stinks.  You may struggle to get the funding you need to run your business. The same is true for how your business is set up. Say you have your taxes completely handled, but you are operating as a sole proprietorship.  You are not separating your business from yourself.  You use your SSN and personal contact information to file your taxes. This will cause issues with your business credit profile.  That in turn causes fundability issues.  

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You need a tax expert to help you with your business tax return.  You need a business credit expert to help you with overall fundability.  Our experts can ensure you’re hitting all the core principles of fundability, and help you figure out what to do to ensure all the factors of fundability are met as closely as possible.  This will give you your best shot at funding your business now, and in the future. Get a free consultation now to find out how Credit Suite can help you.

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