Tag: Impacts

What You Need to Know About How Personal Credit Impacts Business Operations

There are 125 factors that affect the fundability of your business. Personal credit is one of them. Since it impacts the fundability of your business, personal credit impacts business operations.

Personal Credit Impacts Business Operations in More Ways Than One

Fundability is the obvious one. This is the ability of your business to get funding. If you don’t have funding for your business, it can’t operate. 

However, there are more subtle effects as well. For example, if you are worried about your personal finances, business decisions can suffer. You may be more tempted to make decisions based on trying to control personal issues, rather than what is best for the business. Personal financial issues can distract you from running your business well. 

Control What You Can, Mitigate What You Can’t

Bad credit doesn’t have to be the downfall of your business. Some factors are out of your control. Others are not. The key is to know what is causing the problem, fix what you can, and mitigate the rest. 

One way to mitigate personal bad credit and its negative impact on business operations is to build strong business credit. It can also help to know which types of funding rely most heavily on the credit score from your personal report. 

Until you improve your credit, you may not qualify for a traditional business loan. However, there are other options.

Your Personal Score Even Affects the Types of Funding You Can Get

While you are working on improving your credit score, you don’t have to be stuck without funding. You just have to find those types of funding that you can qualify to get with a less than ideal credit score. 

Invoice Factoring

If you have open invoices and offer credit to customers in some form, then you can get paid faster with invoice factoring. Usually, this involves invoices with net terms, such as net 30, 60, or 90. You turn those invoices over to a factoring company, and they give you an agreed upon percentage of the total of the invoices. You get this amount of money immediately, and when your customer pays, the factoring company keeps their agreed upon fee while sending the balance to you. 

Merchant Cash Advances

A merchant cash advance (MCA) technically isn’t a loan. Rather, it is a cash advance based upon the credit card sales of a business. A small business can apply for an MCA, and have an advance deposited into its account fairly quickly. This is ideal for business owners who accept credit cards and are looking for fast and easy business financing. 

A lender will review 3 months of bank and merchant account statements, looking for consistent deposits. They’ll also verify revenue of $50,000 or higher per year and a time in business of 6 months or longer. A lot of Non-Sufficient-Funds (NSFs) showing on your bank statements will likely be a deal breaker, as will excessive chargebacks on merchant statements. 

Basically, they want to see that you manage your bank and merchant accounts responsibly. Of course, a decent number of consistent credit card transaction deposits each month is important for this type of financing as well. 

Alternative Lenders like Fundbox

Fundbox offers a revolving line of credit for up to $100,000 and will auto debit your weekly payment from your bank account. They connect directly to your online accounting software. You pay in equal installments over the course of a 12 or 24 week plan. 

You do need to have a 600+ personal FICO score and $100,000+ in annual revenue, and you must have a business checking account. Ideally, you will also have 6 months in business or more. 

Can You Fix Personal Credit?

If you have bad credit, it needs to be fixed. How do you do that? The short answer is, pay your bills. Still, if you already have bad credit, it will take some time for that to make a difference. 

Also, make sure your credit report is current and free of mistakes. YIn fact, you can get a free copy of your credit report annually. 

The three main reporting agencies when it comes to personal credit are:  

You can get a free report from all three each year. How? 

Per FTC.Gov: 

“You’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies. Order online from annualcreditreport.com, the only authorized website for free credit reports, or call 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity.”

Once you get your report, read it carefully and make certain all of your information is correct. Contact the appropriate credit agency in their preferred manner if you find a mistake. Each agency has its own procedures for corrections.  Generally, you can find them on their website. Online options for disputes are more common now due to the pandemic. 

These steps will help you get a jump on improving your credit score. 

Credit Monitoring

In addition to a free copy of your credit report each year, there are free monitoring services that will give you an updated credit score each month. New information that has been posted to your credit report is available with some of these services. As a bonus, some will offer suggestions as to which  factors are dragging down your score. Some of these services even provide real-time credit updates for a fee.

Good Personal Credit Also Affects Business Operations

Of course, a good FICO score will impact business operations as well. Business lenders will generally look at personal credit when you apply. Consequently, good credit will not only help you get approvals, but better rates and terms also. 

Maintaining good credit is important for a number of reasons.  Keeping your business running is one of them.  

The post What You Need to Know About How Personal Credit Impacts Business Operations 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.

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