Tag: Loan

8 Benefits of Obtaining a Personal Loan

Looking to tackle a home remodeling project soon, or maybe to consolidate some high-interest debt? There are a lot of options out there to get the cash you need, and it’s important to compare personal loans, credit cards and other types of debt to make sure you’re making smart financial decisions.  There are lots of…

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Get the Perfect Fast Business Loan for Your Side Hustle

If you are thinking about making the leap from side hustle to small business, you are probably wondering how to fund it. Even a side hustle has financing options. Can you get a fast business loan? Is a business loan even the best option for your business at this point? 

Funding a Side Hustle Is Hard

A side hustle, by definition, is a business you run on the “side”. That means, you keep your day job. This kind of activity is typically bootstrapped. Often, the funding is with money from your day job. What if it isn’t enough though?

There are other options for funding a side hustle. The options may allow you to grow and expand your business without using personal funds. That is the dream of a lot of small business owners. As a result, many jump on the fast business loan bandwagon.

While there are ways to make that dream come true, fast business loans are not often the way to make it happen. First, they are more likely to be personal loans than fast business loans.

That means, the business owner is solely responsible for repayment and for default. Business loans can work much differently if the business is set up properly. So, what does it take to get the funding you need for your side hustle, and can you really leave the idea of quick business loans behind? Should you?

Challenges to Funding a Side Hustle

There are plenty of challenges when it comes to business funding for a side hustle. One huge challenge is a lack of business credit history. As a result, there is no business credit score or a poor business credit score. That pretty much knocks a business out of the running for traditional fast business loans.

Another challenge is usually a side hustle is not yet set up properly to get business funding. Most business loans look for a Fundable™  Foundation. This includes a number of things, like getting an EIN and incorporating, that most side hustles do not have.

Not being set up properly to get funding leads to reliance on personal credit and financial resources. Sometimes this is necessary, but it’s best to avoid it when possible.

There are Options 

There are options for getting around each challenge. Credit Suite can offer resources to help you get the funds you need to grow your side hustle into something more.

We can help you get the funding you need now, and guide you step-by-step through the process of setting up in a way that will help you get funding far into the future. Eventually you’ll qualify not only for fast business loans, but for options such as SBA loans, a merchant cash advance, and even a traditional line of credit.

Fast Business Loan From a Traditional Bank

Traditional business loans are hard to get for a side hustle, but not impossible. Yet, approval will likely lean heavily on personal credit. Fast business loans usually have higher interest rates and less favorable terms anyway. This may be even more so when it comes to a side hustle.

The key is to look for business loan programs from non-traditional lenders. Many of these operate online and you can get pretty fast business loans if you qualify. But remember, quick business loans come with a price. Anything fast business related is going to cost you. In the case of business loans, the cost comes in the form of higher interest rates and more personal liability.

Your Personal Credit Will Play a Large Role

For most small business owners, particularly startup owners, personal credit scores will be a vital part of any lender determining if a business should qualify. If you have good credit, getting a business loan, even a fast business loan, will probably not be an issue.

Still, as a business owner, you do not want to rely on personal funds any more than absolutely necessary. What can you do? The key is to build separate credit for your business. As you do, lenders will be able to use it to help make the approval decision when you apply for a business loan.

Keep in mind, when it comes to most business loans, your business credit score will be used with, not instead of, your personal score, in most cases.

Open Your Side Hustle to All Financing Options, Not Just a Fast Business Loan

The truth is, your goal should not always be fast business loans. Fast business loans are great. However, a better goal is to create a situation in which your business qualifies for any funding it needs, when it needs it.

As a side hustle, you are not likely to qualify for merchant cash advances, typical small business loans, and other fast types of financing.

However, you are in the perfect situation to start building Fundability™ right now, from the beginning. You’ll save yourself a lot of time and money in the long term. Better yet, done correctly, you could never have to worry about fast business loans again.

Start With a Fundable™ Foundation

This is a must for business funding of any kind, not just fast business loans. Without this, credit providers and lenders will not recognize the business as a separate entity from you, the owner.

That means a lot of things, but a big one is there is likely to be no separate business credit report without a Fundable™ Foundation. It includes: 

  • Business contact information
  • An EIN
  • Incorporating
  • A business bank account
  • A D-U-N-S number
  • Professional website and email address

Credit Suite Can Help!

We guide you step by step through the process of building a Fundable™ Foundation. We can help you find vendor accounts that will report. And we can show you how to build business credit in the most efficient way possible.

Funding a side hustle is hard. But there are other options besides personal finances. You may qualify for a fast business loan, but it’s a long shot. If you take in enough credit card payments, a merchant cash advance may work. Most side hustles do not, however.

Credit Suite can help you build Fundability™ so you can access those options and more. We can help you build a strong business credit portfolio for your small business so you can effectively manage cash flow.

We can help you get funding right now, and help you get set up to qualify for other types of credit in the future, including:

  • A business line of credit
  • A quick business loan
  • Short term business loans
  • Invoice financing
  • Equipment financing
  • and more!

In addition, we can help you find funding that does not require a personal guarantee, and help you determine if and when a personal guarantee may be worth it. In the end, Credit Suite is on a mission to ensure every small business is set to get the funding it needs in the form of small business loans, a line of credit, equipment loans, and whatever else they may need. 

Fast Business Loans

Small businesses looking for fast cash may find success getting funding with online lenders. Quick business loans just do not come from traditional banks. Their systems are much different and the application and underwriting process usually takes much longer.

Online lenders however, are often specifically designed for quick business loans. In some cases you can get fast business loan approval and even have funds in as little as a week.

Examples of Online Lenders

There are a lot of lenders out there. Some are great to work with, while others are closer to a scam. Be careful and do your own research. Here are a couple of lenders to get you started if you decide to pursue the fast business loan option.

Fundbox

Fundbox is actually a line of credit rather than a small business loan. Still, it is a great funding option because the requirements for approval are much more manageable that those typical of a regular bank.

What Does Fundbox Offer?

Their process is automated and super-fast. Repayments are automatic. They draft them electronically on a weekly basis.  One thing to remember is that you could have a repayment as high as 5 to 7% of the amount you have drawn currently, as the repayment period is comparatively short. 

You will have to pay attention and be certain to manage cash flow accordingly so you have enough funds in the account to cover your payment each week. 

They want to see at least 3 months in business, $50,000 or more in annual revenue, and a business checking account with a minimum balance of $500.

Upstart

Upstart is an online lender that uses a completely innovative platform for small business loans.  The company itself thinks that financial information and FICO on their own may not give the whole picture when it comes to the risk of making a small business loan to a specific borrower. 

As a result, they opt instead to use a combination of artificial intelligence (AI) and machine learning to gather alternative data.  Then, they use this data to help them make credit decisions.

What Kind of “Alternative Data?”

This alternative data can include such things as mobile phone bills, rent, deposits, withdrawals, and even other information less directly tied to finances.  The software they use learns and improves on its own. You can use their online quote tool to play with different amounts and terms to see the various interest rate possibilities. 

Note, this is a personal loan.  But, if you need funding now and your personal credit is not great, it can be a good option. It’s a start at least. 

Retirement Plan Financing

This is an excellent way to get fast business funding for a side hustle. If you have a retirement plan, it may be the best option even. First, it is not a loan. There is no early withdrawal fee or tax penalty.

This Credit Suite program offers a flexible and powerful way to leverage assets that are in a 401(k) plan or IRA.

It really is fast too.  In fact, it may take as little as 3 weeks. So while it isn’t a loan, it certainly qualifies as fast business funding. The IRS calls this a Rollover for Business Startups (ROBS). 

Tax Repercussions of a ROBs

The IRS considers a ROBS qualified plan to be a separate entity. It has its own set of requirements. Technically, the plan owns the business, not the individual. As a result, some filing exceptions for individuals might not apply to the plan. Still, always check with a tax expert when it comes to tax matters. 

How to Qualify  

Honestly, it’s not hard to qualify. There is no need to submit financials or have good credit to get approval. In fact, all the lender wants is a copy of your two most recent 401(k) statements. The plan must have a value of more than $35,000 to get approval. You can get up to the amount of your 401(k) that is “rollable.”

It cannot be a plan from a business where you work currently. It has to be from previous employment, and you can’t still be contributing to it. 

How Does This Program Work? 

It may sound complicated, but Credit Suite business credit experts will help every step of the way.  They will help you set up a 401(k) plan in your company.  Next, you’ll invest your 401(k) funds in it. Your business then has the cash flow it needs, but no debt. Despite how hard it sounds, your part is fast and easy. We handle the hard stuff.

ROBS vs. a 401K Loan?

First of all,not all plans allow for loans.  If your plan does, the IRS will only let you borrow up to 50%, capped at $50,000, before you have to start paying taxes.

Also, with a 401K loan you will pay interest. Of course, you are paying interest to yourself. However, you will be making monthly payments, whereas with the 401K Rollover for Working Capital, there is no payment.   

This unique program allows you to tap into your existing retirement account without penalties or taxable distributions. You also avoid loans, banks, or credit checks. There is no debt and no monthly payment. 

Credit Line Hybrid

A credit line hybrid is a credit card stacking program that allows for unsecured business funding. It functions much like a line-of-credit. You can draw the cash you need, and repay only what you use.

It allows you to fund your business without putting up collateral, and you only have to use what you need to cover a cash flow gap, purchase supplies, or anything else.

What Are The Qualifications? 

You do need good personal credit.  Your personal credit score should be at least 68o.  In addition, there cannot be any liens, judgments, bankruptcies or late payments on your personal credit report. 

If you do not meet all of the requirements, it’s not the end of the story. You can take on a credit partner that meets them.  Some business owners work with a friend or relative to fund their business. 

It’s really perfect for growing a side hustle, as you can get it without a ton of documents and it’s flexible. 

What are the Benefits of a Credit Line Hybrid? 

There are many benefits to using a credit line hybrid.  First, it is unsecured. There is no need for collateral. Also, the funding is “no-doc.”  You do not have to provide any bank statements or financials.  

Additionally, often you can get interest rates as low as 0% for the first few months. This allows you to put that savings back into your business. 

It is flexible financing that functions much like a revolving credit line. The process is pretty fast. Part of that is due the fact you get qualified experts to walk you through it. 

Crowdfunding

What is crowdfunding?  It’s actually a pretty common way for small business owners to try to take a side hustle to the next level. You can access tons of investors at once. And, you can test the market at the same time.

How Does It Work?

You market your business on the platform. Anyone who wants can invest in the company.  Some platforms accept donations as low as $5 or $10 dollars, though most require more. 

With rewards-based crowdfunding, you get some token of thanks for your donation.  With equity-based crowdfunding, which almost always requires $500 or more, investors get shares of the company. 

Will It Work for You? 

It works well for some businesses, but not for every business.  In fact, most find that they need to supplement their crowdfunding money with some other form of funding.  Since it is debt free cash however, it may be worth considering. 

The Dark Side of Crowdfunding

While there are a lot of successful crowdfunding campaigns, the majority are not able to fully fund their business through crowdfunding.  According to Startups.com, the average success rate of a campaign is 50%, and 78% of crowdfunding campaigns reach their goal. 

That sounds somewhat promising.  However, it appears success depends greatly on your market, among other things.  Here are a few more statistics from the same study with success broken down by the type of business: 

  • Business and Entrepreneurship: 41.4%
  • Social Causes: 18.9%
  • Films and Performing Arts: 12.2%
  • Real Estate: 6.2%
  • Music and Recording Arts: 4.5%

None of these hit the 50% success rate.  If you choose to go this route, be sure you have a backup plan.

Different Types of Crowdfunding

There are actually two types of crowdfunding.  There is rewards based crowdfunding and equity crowdfunding.  Many see all crowdfunding as a mix between the two. However, they are actually very different.

In fact, while some platforms allow campaigns to do both, many only allow one or the other.  It’s important to determine which one will work best for your business before you decide on a platform. 

Benefits and Drawbacks of Each Type

The best one for your business will depend on a number of factors. It helps to understand the benefits, as well as the drawbacks, of each option. 

Rewards Based Crowdfunding

  • Pros
    • Debt free
    • Do not give up equity in your company
    • Relatively easy
  • Cons
    • Typically raises smaller amounts of money
    • Risk lawsuit if do not follow through on promises
    • Rewards can get expensive

Equity Crowdfunding

  • Pros
  • Easier access to investors
  • Faster way to show investors what you’ve got
  • Less focus on regulatory compliance and more on getting product or service to the market
  • Cons
  • Managing a lot of smaller investors can be harder than managing a few large stakeholders
  • May need an investor liaison, which can be costly
  • Reporting and auditing requirements can get tricky with a lot of investors 

It’s important to note since the topic here is getting a fast business loan, that this is neither a loan or fast funding. It is a way that you can possibly fund a side hustle and grow it into a full fledged business. But, you do not repay funds to investors and it may or may not be fast. With most platforms, though not all, you do not get the funds until you reach your funding goal. There is no way to tell how long that might take. 

Credit Suite Can Help You Get Financing

The truth is, you may not really want a fast business loan right now. There are costs and other factors to consider. One of the other options may work better.

In fact, a fast business loan that offers same business day cash in your account is one of the most expensive types available. Instead of a quick business loan, it’s more useful to have flexible financing options in place to use as needed. 

When that is the case, you can have access to funds on the same business day without having to worry about a fast business loan. You can bridge a cash flow gap, take advantage of business day payment discounts, and more.

But it takes time. If you are ready to jump now, you want to be able to fund it fast. Is that possible? Is a fast business loan the best way to do it? If you can get on with an online lender, maybe. The Credit Line Hybrid usually works really well too. Of course, if you have a retirement plan, it’s hard to beat a ROBS.

Find out how we can help you qualify for financing, as well as the financing options we offer, now.  

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Top 5 Ways Fundability™Can Prevent a Loan Denial

What is Fundability™ and what on earth does it have to do with business loan denial? First, by its very definition Fundability™ is the ability to get funding.

If your business isn’t seen by a lender as Fundable™, you will not get loan approval. It’s not all about your credit report or credit score either.

There is so much more to approving a loan application than that. Good credit history is important, because of course they want to know you’ll make your monthly payments. However, your application has to make it to that point first. If the business isn’t set up to be Fundable™, it might not.

Loan Approval and Denial Issues

It can be incredibly disheartening to fill out a loan application and get a denial. Whether you apply at your local credit union or a traditional bank, they are going to pull credit reports just like with a personal loan.

The difference is, in addition to personal credit and financial information, they will want to see the credit history of the business as well. If your personal credit score is great you may be able to get a loan based on it alone, but it will most likely be considered a personal loan.

How Fundability™ Helps

Strong Fundability™, which includes a strong credit score for your business, will increase approval chances and the chances of getting better terms and lower interest rates.

Understanding why a lender denies an application can be helpful. There are many seemingly small details that can cause issues, and they are not likely to tell you what your specific problem is. So, it’s important to know what factors they consider other than credit.

A Tale of Two Credit Scores

You have two types of credit scores when you’re a business owner. Rather, you should have two types. You should have a personal one and one for your business. The truth is, many business owners do not even realize the second score exists.

The Two Are Not the Same

Sure, they may have some vague idea that their business has its own credit separate from their personal score. But, they think it just sort of happens. This is due to the fact that personal credit does just that. It just happens, passively, as you get and use credit.

Credit scores for business are completely different animals. You have to be intentional with both establishing and building it. You have to actively set up your business in a way that it will have its own score, and then seek out accounts that will report positive payment history so that your score grows. Not every account will do this.

Top Fundability™ Factors that Can Help You Avoid Loan Denial

There are at least 125 factors that affect the Fundability™ of a business, and they all make a difference when it comes to loan denial. However, here are the Top 5.

# 1: Good Personal Credit Can Help Business Prevent Loan Denial

Your personal credit score is still a part of this, even though it is separate from your business. It is affected by several factors. These include credit utilization and payment history. Even how many different types of accounts you have on your report can negatively impact your score.

How Can You Know What’s On Your Personal Credit Report?

You are entitled to a free credit report each year. Make sure to get it from each of the main credit bureaus. Check your free credit score, as it may provide some insight if you have a loan denied. Some apps offer a free peek at your score once a month also, so you can keep up with it during the year.

Beware of Hard Inquiries

In addition to the fact that most traditional lenders will check your personal credit, it can also affect your business credit. It is not unheard of for a business credit bureau to actually use your personal credit score in their calculation of your business credit score. Both Experian and FICO SBSS do this.

So, even if a credit provider only relies on business credit, your personal credit may still affect Fundability™.

#2: Good Business Credit Can Help Prevent Loan Denial

In contrast, payment history is the main thing that makes or breaks business credit. Get your credit report from each credit reporting agency, and check it carefully. You may find the score isn’t great or that it is non-existent because of many accounts not reporting positive payment history. 

You will not find free access to your business credit reports. Yet, Credit Suite offers an ongoing monitoring package that is a fraction of the price that others charge.

Choosing the Right Accounts Is Important

It’s important in the beginning to choose credit accounts carefully. You need to both get approval and know they will report payments you make. Not all do, and some only report missed payments.

Credit Suite maintains a thorough and up-to-date database of vendors that report, along with what is required for approval. We can help you apply for the right ones at the right time to build business credit in the most effective and efficient way possible, saving you both time and money.

#3: Having a Fundable™  Foundation Helps Prevent Loan Denial

A Fundable™ Foundation includes:

  • Having separate business contact information
  • Getting an EIN
  • Incorporating
  • Opening a separate, dedicated business bank account
  • Ensuring you have all licenses needed to operate legally
  • Having a professional business website and email with matching URL

While none of these things guarantee loan approval, they are all necessary for Fundability™ and building business credit. So, a lack of these things can definitely result in loan denial.

#4: The Right Business Name Can Help Prevent Loan Denial

Imagine a lender looks at your loan application and see’s the name “Jack Sparrow’s Weed Dispensary.” While marijuana is legal in some states, it is pretty much universally considered a risky industry by lenders. That said, this name could get your loan denied before they even look at a single credit report.

Instead, just leave the part that indicates risk out. Just call it “Jack Sparrow’s.” At least you’ll get further along and avoid loan denial simply because of your business name.

But, you likely know already that your credit score is important when it comes to both getting a personal loan and trying to get business funding. Let’s look at some of the lesser known Fundability™ Factors that can cause, or prevent, loan denial.

#5: Consistency Is Key to Avoiding Loan Denial

In a lender’s mind, inconsistency is a red flag for fraud. It doesn’t take much. If your business information is not listed exactly the name everywhere they look, you may have a loan denial on your hands.

This includes something as small as using an ampersand in one place and the word “and” in another. Even a common misspelling can lead to big problems.

For example, if you list your business as “Joe and Bo’s” on the loan application, but the credit report says “Jo and Bo’s” or “Joe & Bo’s,” or anything at all different, you could be denied automatically.

Lenders spend a lot of time going through a potential borrower’s credit history. Most will not take the time to chase down and reconcile minor errors before they even get to the credit reports.

Remember the Basics

Of course, you always have to handle credit responsibly. Things like excessive credit card debt on your personal credit will always cause issues. Furthermore, if your business does not have the monthly gross income it needs to handle loan payments, approval isn’t likely.

The whole point of underwriting is to ensure your company can and will handle monthly debt payments, and monthly income is a big part of that. Some business owners use personal loans to fund their business until they get to that point. It’s best to avoid this if at all possible. You could end up with bad credit on the personal side and bad credit or no credit on the business side. It’s best to find a balance.

What Will Business Loan Underwriters Look At?

Underwriters will look at all sorts of things to determine loan eligibility. Of course, they will start with the application. Make sure it’s complete and accurate. Then, they’ll examine both your business and personal credit file.

Other Datae Underwriters Consider

It varies by lender, but one thing they may look at is the cash deposit history in your business bank account. Personal finance information may come into play if you do not have a lot of business finance history. That means potentially employment history, defaulted loans, late payments, and more can be fair game. A hard credit inquiry on your personal credit report related to this is possible as well, which will have a small negative impact.

Beyond Approval

If you get approval, this information will play a part in decisions related to interest rate and credit limit. Loan offers depend heavily on your financial situation, and each new loan will go through the whole process again. So, if you have been denied once, but have made all your loan payments on any other debt since then, you may not be denied the next time.

Credit Suite Can Help With Fundability™ to Help Prevent Loan Denial

There are a number of ways Credit Suite can help. First, we have trained business credit specialists that can walk you through each step of setting up a Fundable™  Foundation. Then, we can help you find the accounts you need to report payments so that your business credit score can grow.

As already noted, we offer business credit monitoring at a fraction of the cost, so you can see each step of the way how many accounts you have reporting and track your progress.

Not Just Fundability™, But Financing Too

In addition, we can help you find the funding you need right now. Our finger is on the pulse of the industry. We know which lenders are approving most frequently at any given time. We know which loan products you qualify for, and we can guide you as to which types of funding may work best for your business now and in the future.

Credit Suite has the Secret Sauce For Cooking Up Strong Fundability™ and Business Credit

Our team can give you long term strategies to help increase your chances of getting approved. We can show you how to apply for a loan in a way that will offer better odds by ensuring there is no missing information or inaccurate information.

As you qualify for more accounts, your business credit score will only grow. If you keep your finances in order, including keeping excellent credit, you will soon be eligible and get approved for credit cards and loans.

With the strong Fundability™ Credit Suite can help you build, you can get the funding you need, when you need it, now and in the future.

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Do You Want a Million Dollar Business Loan? Here’s What You Need to Know

What could your small business do with a million dollars? Most small business owners think getting a million dollar business loan is a dream come true. Yet, do you really know what it takes not just to get a business loan of that size, but to pay for it? How much does a million dollars cost? Here’s what you need to know. 

The First Step is Building a Fundable™ Foundation

Your small business needs a Fundable™Foundation to qualify for business loans. The foundation is how your business is set up.

A small business that isn’t set up to be Fundable™ will be hard pressed to get business loans of any type, especially traditional bank business loans.

For sure, a million dollar small business loan will be difficult to get. This is what sets your business apart from you as the owner. As a result, the foundation is the kick start to overall Fundability™.

What’s In a Fundable™ Foundation? 

A Fundable™ Foundation is necessary for any type of business loans. That means a small business loan, vendor credit, credit cards, or any other type of business funding. It includes the following. 

Business Name

First, your business name needs to be registered with the Secretary of State.  Furthermore, it should not include or allude to a high-risk or restricted industry. Lenders do not like risk, and most are not in the habit of making business loans to businesses in high-risk industries.

Consistency

Also, your business name has to be consistent everywhere you use it. If it changes, change it everywhere, and be sure it is the same.

Consider the following examples. 

“Bill & Tom’s Discount Fishing Lures, Inc.” 

“Bill and Tom’s Discount Fishing Lures”

“Bill’s and Tom’s Discount Fishing Lures”

Of course, they are similar. Yet, they are not the same. So, if you use one of these on your registration with the Secretary of State and one of the others on your million dollar loan application, you may not even make it to the underwriting process.

Likely, your application will be automatically denied for business loans due to fraud concerns. 

Business Address

This must be a deliverable physical address, never UPS box or a PO Box. It’s true, a virtual address can work.  Yet, we know of at least one credit provider that will not accept them. 

EIN

You can get an EIN, or Employer Identification Number, free at IRS.gov. Then, use it to open a bank account and to build a business credit profile.

Be sure to verify that all agencies, banks, and trade credit vendors have this number and associate it with your business .

Business Entity

Using a corporation or LLC structure gives you more credibility.  Better yet, it reduces your personal liability. 

Business Phone and 411 Listing

Remember, toll-free phone numbers are best.  Also, it should be listed in the 411 directory. 

Business Licenses

Always make sure you have the proper licensing. 

Web Domain and Professional Website

For many reasons, you need a professional website that is helpful. Lenders will research your business online, especially before lending a million or more. 

As a result, you should pay for web hosting. Unfortunately,  this is not the time to use a freebie. Also, the domain should be the business name, if possible.

In addition, you need a company email address. It should be the same domain as your website.  

Business Bank Account in the Business’s Name

Due to the fact that business banking history is vital to getting business financing, it is necessary to have a separate, dedicated business bank account.  Of course, the longer the bank history is, the better. 

Next Step is to Build Strong Business Credit

As you know, lenders like to see a strong business credit profile. As a result, while personal credit isn’t ignored, good business credit can soften the impact of a bad personal credit score. 

Nothing Replaces a Strong Business Plan

Without a strong business plan you won’t get business loan approval. Whether you are looking for a traditional loan, SBA loans, or working with online lenders, this is important. This is true even though online lenders tend to be less strict with business financing approvals, a strong business plan never hurts. The presentation should be professional in both appearance and content.

Business Plan Writing Resources

You can hire a business plan writer, or do it yourself, but use all available resources.  

The Small Business Administration offers helpful business plan writing resources, and not just for SBA loans.

The Small Business Development Centers have a number of helpful aids also. Check with local universities to find one near you.

The Major Clincher for a Million Dollar Business Loan is Revenue

Obviously, you can’t get funding without revenue. Of course, this is because business loan repayment comes from revenue, and lenders want to know they will be repaid.

But, exactly how much is the payment on a million dollar business loan? 

Example Monthly Payments on a Million Dollar Business Loan

Business loan terms and payment amounts are variable based on terms and rates. Consider a $1M loan with an interest rate of 4% fixed for 20 years. The monthly payments on that business loan would be $4,774.15.

Then, consider the same business loan with the same interest rate for 15 years.  The payment on that is $7,396.88 a month. 

A Word About Collateral

If you have a Fundable™ Foundation and strong business and personal credit, the next step to getting more funding is collateral. It allows for better loan terms, including more money with lower interest rates and better terms. Furthermore, many SBA loans require collateral anyway.

Types of Collateral

Collateral can be pretty much any valuable asset. These include:

  • Buildings
  • Equipment
  • Inventory
  • And more

What Does it Take to Get a Million Dollar Business Loan?

To get the most funding possible, whether through small business loans or other funding, you need: 

  • Fundable Foundation
  • Good business and personal credit score
  • Professional business plan
  • Collateral

Credit Suite Can Help

We can help with the Fundability and business credit. We know the secret sauce to get you started and help you grow in the most efficient way possible.

Then, you can get the funding you need, when you need it. With Credit Suite, you may be eligible for a million dollar loan sooner than you think.  

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Apply for a Business Loan Without Getting Denied for Fraud Concerns

Many business owners apply for a business loan and end up being denied, never knowing why. Surprisingly, one of the most common reasons for denial has more to do with the actual application than the creditworthiness of the company. A lot of applicants never make it to the financial review process simply because their application triggers fraud concerns with the lender. 

Apply for a Business Loan Without Fraud Concerns: Consistency is Key

Discrepancies of any kind set off red flags for lenders. When something doesn’t add up, they don’t look too far for answers. In contrast, they simply deny. 

Application denials for this are common because inconsistencies reek of fraudulent activity. Just the appearance of fraud, any inkling, is enough for most lenders to deny. 

Consistent Business Information

Your business name and other information must be consistent. If you list it one way on your application and it is different anywhere else, denial is imminent. That means, even an ampersand in one place and the word “and” in another can mean denial.

Information Must Be Verifiable

When you apply for a loan, the information you put on it must be verifiable. Lenders might search with the Secretary of State to verify ownership. As you can imagine, if the business information on the application does not match the Ssecretary of Sstate records, they may very well deny it automatically. 

If they decide to investigate further, they may ask for tax returns, even if they already have financials. The catch is, even if they originally ask only to verify information, due diligence dictates that they look at all of it. This may not work in your favor. 

The more you make, the more you pay. As a result, businesses do not want to show they make money.  Yet, if your tax return shows a large loss, it results in a denial. If your information is verifiable in the first place, it may not be necessary to give lenders tax returns. 

Verifying Income

Do yourself a favor and don’t try to lie about income.  There are plenty of ways to verify, and credit providers will do that. You can be sure they can and will verify everything. Not just income either. The truth is, this goes for any information. That includes ownership percentage, date of opening, and of course financial information.

Personal Information Matters

Some are surprised to find out that personal information comes into play when you apply for a business loan. It has to be verifiable as well. Resist the thought that you may be able to fudge on personal information when you apply for a business loan. They will know. 

Do  Not Buy a Credit Privacy Number (CPN) to Try to Hide Bad Credit

A legitimate CPN is available by working with an attorney to file a claim with the Social Security Administration. That is, if you have a compelling claim. Bad credit is not a compelling claim. 

Some claim a CPN will offer fresh credit history. As a result, companies use sketchy ways to get numbers to sell. Unfortunately, these 9-digit numbers may be dormant social security numbers or numbers that belong to children. By purchasing one, you could unknowingly end up in an identity theft scam. 

Also, using any number other than a Social Security number where an SSN is called for is a violation of two federal laws.

Your best bet is to resist the temptation to use a CPN.

Apply For a Business Loan the Right Way

It’s not hard to avoid denial if you just apply for a business loan the right way. First, make sure all of your information is consistent everywhere. Then, ensure that when you provide information on a loan application, it is verifiable. Last, be honest. Don’t use numbers other than your Social Security Number or EIN. In the end, this is your best chance at getting your application through the initial process and to the financial review. The best part?  This is just one of the business loan secrets we can share with you. 

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7 SBA Loan Options That Don’t Require Luck

Why Should You Want an SBA Loan?

The Small Business Administration works with lenders to guarantee loans to small businesses. These SBA loan options are available to businesses that would not be able to get them otherwise, due to the government backing.

Due to the  SBA guarantee, lenders are able to offer lower rates and better terms than would otherwise be available. However, there is typically a lot more red tape, making the approval process longer than non-SBA loans.

Overview of Qualifications for SBA Loans

The SBA uses FICO SBSS (Small Business Scoring Service). Scores run 0 – 300, and you will typically not gain approval if score < 140.  Yet, a typical cutoff can be as high as 160. In addition, you will usually need to show some time in business, and if you have more than a 20% ownership, you will need to provide a personal guarantee.

sba loan options credit suite 3 hand on calculator with pen #1 SBA 7(a) Loans

To get a 7 (a) loan you’ll need to first demonstrate need for funds and have a sound business purpose in mind. You’ll also have to meet SBA size standards for a small business. Additionally, a business must do, or propose to do, business in the United States or its possessions. You also have to try to use other financial resources before applying, including personal assets.

#2 SBA CapLines

The SBA offers 4 CapLines, each designed for a different type of business.

  • Seasonal Line
    • Advances against anticipated inventory and accounts receivables
  • Contract Line
    • Finances direct labor and material cost of performing assignable contracts
  • Builders Line
    • For GCs or builders constructing or renovating commercial or residential buildings
  • Working Capital Line
    • Must have accounts receivable or inventory. Meant for short-term working capital or operating needs.

sba loan options credit suite 4 woman smiling and writing#3 SBA Express

This is a faster way to get a SBA loan options of up to $250,000. Typical rates are 2-4% above prime rate.

SBA lets banks charge up to 6.5% over their base rate, and loans over $25,000 require collateral.

#4 SBA 504 Loan Optionssba loan options credit suite 5 hand with pen marking checklist

These are often to buy land, equipment, or real estate. You can get a loan of up to $1,000,000, and the typical borrow contribution is 10% of equity.

The business must be a for profit operating in the United States or its territories. Same as a 7(a) loan, you  must try to use other financing before applying. Average net income must be less than $5 million after taxes for the last 2 years.  Also, you have to be able to repay the loan on time from projected operating cash flow.

sba loan options credit suite 6 small man on coin stack with multicolored arrows#5 SBA Microloan Program

These loans are for working capital and growth. As the term “microloan” indicates, they are for smaller amounts averaging from $10,000 to $13,000. However, you can get up to $50,000. These funds are made available through specially designated intermediary lenders. They are nonprofit community-based organizations with experience in lending, management, and technical assistance.

#6 Community Advantage Loan Optionssba loan options credit suite 7 two women looking at paperwork smiling

This program has been extended to 9/30/22. The goal is to promote economic growth in underserved areas and markets. It allows those that make credit decisions to overlook certain factors. So, things like poor credit or low revenue do not have as negative of an impact on approval. This is for businesses that have potential to stimulate the economy or create jobs in underserved areas.

sba loan options credit suite 8 block on computer keyboard with question mark on it#7 SBA Export Working Capital

This program provides financing for suppliers, inventory, or production of export goods during long payment cycles.  In addition, it allows for financing for stand-by letters of credit used as a bid for performance bonds or down payment guarantees.

SBA Loan Approval is Not Just Luck of the Draw

SBA loan approval is not subject to the luck of the draw. They have strict standards that you have to meet, but the required credit score is typically lower than non-SBA loan options, and the interest rates are usually lower. These benefits outweigh the longer application and approval process for many business owners.

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How to Maximize Your Business Loan Approvals

Do You Know How to Maximize Your Loan Approvals?

Did you know that you can maximize your loan approvals? It is actually possible to increase your chance of getting business loans? Fundability™ is a big part of it—and it helps you get more money when you get an approval. Paying attention to small details can make a BIG difference. Building business credit can also help.

You Can Get More and Better Loan Approvals, Even if…

You’ve been turned down when you’ve tried to get business loans, and you don’t know why. Or you got an approval but didn’t get as much as you wanted and needed. Or your business is getting to a point where you need more financing to get to the next level. Another possibility is that you’ve exhausted other sources of financing. Perhaps you’ve got an intriguing offer or opportunity to help and improve your business. But you can’t take advantage of it until you have more money.

If any of those apply, then this blog is for you.

Business Loans and Your Business

Of course, every business needs money. And a business loan may end up being your best option. But approvals aren’t guaranteed, and you might not be able to get an approval for as much as you want. What do you do?

The Three Cs

There are three Cs which lenders are looking for when determining if they should approve you for a loan:

  • Credit (business or personal)
  • Cash flow
  • Collateral

And there’s a fourth, character. It represents more of your willingness to pay back a loan if you have the means to do so.

Business Loans and Fundability™

Lenders will also be looking at what’s called Fundability. This is the ability of your business to get funding. You have control over a lot of its nuances and details,  and they will also help you get loans.

Start with a Practical Approach to Business Loans

You’ve got three missions when it comes to business loans. The first is to get an approval. And the second and third are to get as much money as you can, at the best terms you can get. Hence there are a few concepts to keep in mind as you apply for business loans.

Check requirements carefully and don’t apply if there’s no way you can get approval. Recognize short terms don’t have to be a deal breaker, particularly if you don’t have a lot of time in business. Consider how much money you need and be realistic about that. Even if you can get more money than you need, avoid scope creep and biting off more than you can chew.

Have a plan and try not to search for loans while under duress. Emergencies happen, but they should be rare exceptions, not the rule. Line up your ducks and prepare to apply for a loan before you need one. This will raise your success rate.

Making Collateral Work for You for Business Loan Approvals

Lenders are always trying to mitigate risk. As a result, they love collateral. Collateral gives lenders a recourse if your business defaults on the loan. Collateral can take several different forms.

Stock Financing

Many people are sitting on retirement funds or securities. Stocks and bonds make great collateral. Securities-based lending provides ready access to capital. Use it for almost any purpose, like buying real estate or investing in a business. But you can’t use it for other securities-based transactions like buying shares or repaying margin loans.

Terms and Qualifying

You continue to earn interest on stocks pledged as collateral. Closing and funding takes less than 3 weeks. Rates can be as low as 1.6%, but you will have challenged personal credit.

Bonds Financing

Get securities-based lending for bonds through large financial institutions and private banks. These kinds of loans are good if you want to make a large business acquisition. They are also good if you want to execute large transactions like real estate purchases.

Lenders determine the value of the loan based on the borrower’s investment portfolio. In some cases, the issuer of the loan may determine eligibility based on the underlying asset. It can end up approving a loan based on a portfolio of US Treasury notes rather than stocks.

Terms and Qualifying

You can use most investment-grade corporate, treasury, municipal, and government agency bonds. You keep all the interest and appreciation from your securities. To qualify all the lender will need is a copy of your two most recent securities statements. If your stocks or bonds are worth over $25,000, you can get approval. This works even with severely challenged personal credit.

You can also put up 401(k)s and IRAs can as collateral. In fact, the IRS ROBS (Roll Over for Business Startup) plan makes it easy to tap into an IRA or a 401(k). With ROBS, your retirement funds roll into a new plan, and that plan invests in your business!

401(k) Financing

It is not a loan. You need not pay an early withdrawal fee or a tax penalty. You put the money back by contributing, like with any 401(k) program. As a result, you won’t lose your retirement funds. This is a 401(k) Rollover for Working Capital program.

Per the IRS, a ROBS qualified plan is a separate entity with its own requirements. The plan, through its company stock investments, owns the trade or business. This is rather than the individual owning the plan. Hence some filing exceptions for individuals may not apply to such a plan. This type of financing isn’t a loan against, your 401(k), so there’s no interest to pay. This is a movement or change of custodian.

Terms and Qualifying

Low rates, often less than 5%. Your 401(k) must have more than $35,000 in it. Can usually get up to 100% of what’s “rollable” within your 401(k). The lender will want a copy of your two most recent 401(k) statements.

You can get 401(k) financing even with severely challenged personal credit. The 401(k) you use cannot be from a business where you are currently employed. You cannot be currently contributing to it.

IRA Financing

Like 401(k) financing. In as little as 3 weeks, you can invest some of your retirement funds into your business. This gives you more control over the performance of your retirement plan assets. And it gives you the working capital you need for business growth.

Terms and Qualifying

In general, you will work with a CPA. They will help you roll over a non-contributing and qualifying account. This allows for cash out of half, or $50,000, whichever is less. If applicable, the CPA will structure a self-directing IRA for the remaining funds.

Making Personal Credit Work for You When Seeking Business Loan Approvals

Lenders love good personal credit scores. A high FICO score is an assurance that you pay your bills. What if you don’t have such good personal credit? Then work with a guarantor or a credit partner who does.

Leverage Good Personal Credit and Apply for our Credit Line Hybrid

A credit line hybrid is a form of unsecured funding. Our credit line hybrid has an even better interest rate than a secured loan. Get some of the highest loan amounts and credit lines for businesses. And get 0% business credit cards with stated income. These report to business CRAs, so you can build business credit at the same time. This will get you access to even more cash.

Terms and Qualifying

You need a good credit score or a guarantor with good credit to get an approval (a FICO score of at least 680). No financials necessary. Loans go up to $150,000. You must have open revolving accounts now on your credit report. Balances must be below 40% of your limits.

Making Business Credit Work for You For Business Loan Approvals

Business credit is credit in the name of the business and not its owner. An owner with bad personal credit can still have good business credit. A good business credit score provides another assurance to a lender. And since it’s mostly based on repayments, it’s a very reliable indicator for lenders.

Business credit doesn’t come to you automatically; you must work to build it. As you plan for maximizing your loan approvals, it makes sense to build business credit. Vendors are a large part of the process

Vendor Credit

Starter vendors are open to working with most businesses, even startup ventures. Make sure vendors report to the CRAs—most don’t. Vendors tend to report to the business CRAs within 60 days. They help you build your business credit profile and score.

Terms and Qualifying

Terms will vary depending on the vendor, but they tend to be Net 30. Most will want your business to be set up right. This means an EIN, a business bank account, a separate business address, and more.

With vendor credit, you will not need collateral, good personal credit or even cash flow. Buy what you need on credit, pay the bill on time, and your business credit will improve. And, in turn, your chances for loans, and for higher amounts, will also improve.

Making Cash Flow Work for You for Easier Business Loan Approvals

Sometimes, the best loan isn’t a loan at all. Do you have as-yet unpaid invoices from credit card sales? Have you been in business for at least 6 months? Then your best financing product might be merchant cash advances.

Merchant Cash Advances

An 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 quickly. So you can offer Net 30 terms but need not wait a month for payment.

This can be ideal if you accept credit cards and want fast and easy financing. Get funding, based on cash flow as verifiable per business bank statements—and no more. Hence lenders in general will not ask for any burdensome document requests.

Terms and Qualifying

A lender will review 3 months of bank and merchant account statements. They want consistent deposits. Deposits must show revenue is $50,000 or higher per year They will also verify time in business of 6 months or more.

You can’t have a lot of Non-Sufficient-Funds (NSFs) on your bank statements. And you can’t have a lot of chargebacks on your merchant statements. Plus, you need more than 10 deposits in a month going into your bank account. In essence, you have to show you can manage your bank and merchant accounts well. You need a decent number of consistent credit card transaction deposits each month.

Fundability™ and Business Loan Approvals

Fundability consists of over 100 separate factors. These factors help your business get loans and build business credit. And they can assure your customers and prospects. Let’s concentrate on aspects of Fundability relating to business loans and lending.

Fundability™ and the Application Process

The application process and application submission is a pillar of Fundability. Application submission consists of eight separate elements. Details like these can make a real difference in your chances of approval.

Verifiability

The first three details are all about verifiability. Can a lender verify these details? They are business ownership, company address, and business name.

You can help make these details readily verifiable. So make sure your business details are consistent everywhere. This means online places like your website. And it means offline places like the name and address on your business licenses (if necessary).

When details are consistent everywhere, lenders run a quick search for your business. They’ll find a match and that gets you further along in the process. Because if they don’t find a match, they’ll deny your application as fraud. This is regardless of your character and intentions.

Choosing a Better Lending Product

Some lending products may work better for your business than others. For example, a startup business with little consistent cash flow. Hence, it should concentrate on a product where cash flow is less of an issue if it’s an issue at all. Or you may find a loan isn’t your best choice—a line of credit might suit your needs better.

Choosing a Lender

With the internet, your lender doesn’t have to be around the corner anymore. The internet also means you can do some sleuthing. The lender where you have your business bank account should be one possible choice. But also take to Google and search for (your industry) business loans. E.g. cannabis business loans or nail salon business loans.

If you’ve never heard of a lender, check the Better Business Bureau and Yelp first. Look for complaints and lawsuits so you can assure you’re dealing with a reputable lender. A lender which specializes in your industry is a lot more likely to say ‘yes’. They know if your business has potential even if your balance sheet says otherwise.

Application Timing

Applying for a loan right after your business shows an uptick in profits, can help make a ‘yes’ a lot more possible. This is a lot harder to do if you’re reacting to a crisis, rather than proactively planning for the future.

Loan Negotiations

Did you know you can negotiate business loan terms? You can negotiate the interest rate, prepayment terms, and even if you must provide a personal guarantee. The means of delivering your application can also matter. This is because in person applications are much more conducive to negotiations.

Fundability™ Helps You Maximize Business Loan Approvals

The amount of money you can get often ties to a few more aspects of Fundability, as are the repayment terms you can get. These are details like how long you’ve been in business. Can produce all necessary business tax returns?

If your business is higher risk than others, that affects approvals. Your business name, industry, and/or NAICS and SIC codes can signal that. Also, if your business has UCC filings or liens against it. If your business has been through bankruptcy (or you have), it will affect your chances. As will are any judgments against it. If you have a criminal record and/or owe child support, those will also affect your chances.

Maximizing Your Business Loan Approvals: Takeaways

Maximizing your loan applications means increasing your chances of getting business loan approvals. Improve your chances with good personal and/or business credit. Provable cash flow and having valuable collateral to offer also help. You can also improve your chances, and maximize how much you can get, by building Fundability™.

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