Tag: Loan

How to Get a Credit Based Loan with No Cashflow or Collateral!

Do you need business funding but lack the cash flow and collateral that most lenders require? In other words, you need a credit based loan. But, is that even a thing?

Are Credit Based Loans a Real Thing?

Honestly, no. Still, bear with me. When we talk about credit based funding, we are talking about funding for your business that is based on credit only.

In contrast, most traditional loans are what is called “full-doc” financing. Meaning, while creditors may take business credit or personal credit into account, other factors weigh heavily on the decision.

For example, potential borrowers are required to hand over financial statements, tax returns, check stubs, and more. As a result, the process can be much longer and more complicated.

Credit Based “Loan” Options

Yet, if the idea is that any credit is, at its core, a loan, then there are credit based loan options available. Now, these funding options do not necessarily take personal credit into account, though some may. The point is, they are “no-doc” financing options. You do not have to provide documents like:

  • check stubs
  • financial statements
  • tax returns
  • or and other documents

Some examples of credit based loan options include:

The Credit Line Hybrid

A credit line hybrid is a form of unsecured funding. Also, our credit line hybrid has an even better interest rate than a secured loan. The best part is, it’s a credit card stacking program, and many of the cards report to the business credit reporting agencies. As a result, you can build business credit and fund your business at the same time.

For approval, you need a good credit score or a guarantor with good credit. Consequently, the minimum personal credit score is a FICO of 680. Yet, you will not have to supply any financials, and you can get a loan of up to $150,000. It’s important to note, some of the cards in the program may report on your personal credit.

Business Credit Cards

Business credit cards are universal-type credit cards, like MasterCard. In fact, they can be used pretty much anywhere. Even better, some of these cards have rewards programs as well. However, It’s important to review rewards programs thoroughly. Unfortunately, some may not be relative or attainable for your specific business.

Currently, business credit cards are the main source of credit-only based business funding. Generally, you will need to have at least 14 accounts reporting to the business CRAs. Additionally, they may require a minimum time in business or minimum number of employees. Here are a few examples, but there are many business credit card options out there.

Alpine Bank Visa Platinum Rewards

Alpine features:

  • No annual fee
  • One point per dollar spent
  • Decent APR, comparatively
  • Low spend amount to earn bonus

Amazon Prime Store Card

Of course, Amazon is such a versatile marketplace that this card can be useful for most any business. It features:

  • 5% cashback on Amazon purchases
  • No annual fee

Sadly, limits seem to be low. Also, there are reviews of this card on the Amazon website. Certainly take the time to check them before applying.

Bank of Hope Business Rewards Visa® Credit Card

Bank of Hope card Features include:

  • No annual fee
  • Triple points on gas
  • Double points on travel and dining
  • One point per dollar on all other purchases
  • Easy to meet minimum spend for bonus points for most

Chase Bank Ink Business Cash®

Chase Bank Ink Business Cash top features include:

  • Fairly decent interest rates
  • No annual fee
  • 5% cash back on the first $25,000 you spend on certain business products, i.e. office

CitiBank Costco Anywhere Visa® Business Card

First, you must be a Costco member to get his card. It offers:

  • 4% cash back on eligible gasoline purchases, including buying gas at Costco limited the first $7,000 per year
  • After that, get 1% cash back
  • 3% cash back on restaurant and eligible travel purchases
  • Earn 2% cashback on all other purchases from Costco and Costco.com
  • 1% cash back on everything else
  • There is no annual fee

A Credit Based Loan Can Help You Get Funding Without Cashflow or Collateral!

Fortunately, credit based funding is a legitimate way to fund your business needs without the need for collateral or meeting cashflow requirements. As noted, the most common source of this type of funding is business credit cards, or programs like the Credit Suite Credit Line Hybrid. As you can see, there are plenty of possibilities. The trick is, you just have to find the one that will work best for your business.

The post How to Get a Credit Based Loan with No Cashflow or Collateral! appeared first on Credit Suite.

6 Ways Applying for a Small Business Loan Can Affect Getting Approved

The 125 factors that affect the fundability can be broken down into 4 main categories. One of those categories is the Application Process.

Here are 6 ways applying for a small business loan can affect the fundability of your business.

# 1: Timing

When you apply for a loan makes a difference.  Consider your current circumstances. If you have recently paid off a lot of credit card debt, that’s great! But, the payoff will not show up on your credit report immediately. Lenders will see more debt than is actually there.

The same is true of any change on your reports.  UCC filings, liens, bankruptcy, and anything else that may be added or about to roll off can affect a credit provider’s decision.

You have to monitor your business credit and personal credit reports so you can get the timing right when applying for a small business loan.

#2: Lender Negotiations

Having a good relationship with a lender that is familiar with your business and its industry is priceless. It can allow you insight to understand if you have flexibility to negotiate. Maybe you apply for a loan and get initial approval for $10,000.  If you have a couple of other credit providers that are ready to extend substantially higher amounts, you might be able to use that to convince the lender to approve more.

 

#3: Application Format

It may seem like applying online is always the best option these days. It’s for sure faster and easier.  Yet, there can be substantial differences in what is available if you apply in person or with a paper application.

Some lenders may require a personal guarantee if you apply online, but have a paper application that does not require one. There are any number of possibilities, that’s just one example.

 

 

#4: Lending Product Selected

You have to choose the right lending product for your business.  A large project you want to complete may mean you need a business loan. However, if you simply have a lot of smaller expenses and want a way to manage cash flow, a credit card or line of credit may work better

#5: Lender Selection

Some lenders may loosen their belts and lend more around the end of the

year.  Eventually, they will tighten up again.  Then,  another group of lenders may decide it is time to increase lending. Knowing which lenders are lending more what you are applying for a small business loan greatly increases your chances for approval.

6: Verifiable Information

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

Get Help Applying for a Small Business Loan

Lending trends, choosing the best lending product, and a number of other factors in this process are difficult to maneuver on your own.

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 can see the big picture.

The post 6 Ways Applying for a Small Business Loan Can Affect Getting Approved appeared first on Credit Suite.

How Can I Get a $10,000 Loan for My Business With 1 to 3 Years Operating

In terms of business funding, the longer you have been in business, the better. There are some nuances to this you may not expect however. How can you get a $10,000 loan for your business when you have only been operating for 1 to 3 years?

How Long Have You Really Been in Business?

You may not have been in business as long as you think. At least, not in the eyes of credit issuers.

For example, if you have been doing business as a sole proprietor, and then decide to incorporate, some credit issuers will consider the date the business began to be the date of incorporation. Another thing that can affect time in business in the eyes of a lender is the date you open your business bank account.

Many lenders require a separate, dedicated bank account for your business, and they consider the date the business began to be the date the bank account was opened.

How Does Time In Business Affect Funding?

Generally speaking, the longer you have been in business, the more funding you can get. And you can also get better terms and interest rates when you have been in business longer.

There are not as many funding options when you have only been in business a year or fewer as there are when you have been in business 2 years, 3 years, or more. The longer you are in business, the more financing choices you will have.

$10,000 Loan Options for Companies with 1 Year in Business

When you were in business for less than one year, your funding options were pretty limited. There are ways to get money, but few of them are actually loans. These include:

  • The Credit Line Hybrid
  • Retirement and Investment Financing
  • Angel Investors
  • Venture Capital
  • Crowdfunding
  • And grants

You have more choices for $10,000 loan options once you get beyond a year in business.  Still, the Credit Line Hybrid in particular is a good choice regardless.

Credit Line Hybrid

A credit line hybrid is a form of unsecured funding. With it, you can get interest rates as low as 0%.  It’s a credit card stacking program, and many of the cards report to business CRAs. This means, you can build business credit while funding your business.

You need a good credit score or a guarantor with good credit to get an approval. For the Credit Suite Credit Line Hybrid, this is a FICO score of at least 680. No financials required, and a $10,000 loan which this program is more than doable.  That is because often you can get a loan of up to $150,000.

Be aware, some cards may report on your personal credit. That means it can affect your personal credit score as well, so be sure you make your payments.

$10,000 Loan Options with 2 Years In Business

With another year in business, you can access the above funding types, plus you have the possibility of a few more. Here are some examples:

Business Revenue Lending

Although you can technically qualify with only one year in business, the annual revenue requirement is high enough that applying later may make more sense. With a similar basis for getting funding, business revenue lending can be considered a reasonable alternative.

This is a way to raise capital from investors who get a percentage of the enterprise’s ongoing gross revenues in exchange for money invested. In a revenue-based financing investment, investors get a regular share of business income until a predetermined amount is paid.

Often this predetermined amount is a multiple of the principal investment. It can be between 3 – 5 times the original amount invested. Since repayment of the loan is based on revenues,  the time it takes to repay the loan will fluctuate. The faster revenue grows, the quicker you’ll repay the loan, and vice versa.

The percentage of monthly revenues committed to repayment can be as high as 10%. Furthermore, monthly payments will fluctuate with revenue highs and lows and will continue until you’ve paid back the loan in full.

The terms for the Credit Suite business revenue lending program are:

  • You must be able to prove consistent revenue verifiable through bank statements
  • Loan Amounts from $5,000-$500,000
  • 3-36 month terms
  • 10-1.45%
  • 500 credit score or higher, with no recent bankruptcies
  • Annual business revenue of $120,000 or more per year
  • Or business must bring in at least $15,000 monthly revenue with 6 months’ time in business
  • In business for a year or more
  • The business must do more than 5 small transactions each month
  • Financial services industries are prohibited

Cash Flow Financing with Fundbox

Fundbox makes cash flow financing easy. All they need is information relating to business cash flow when deciding whether to approve. You can get a revolving line of credit for up to $100,000. Fundbox will auto debit your weekly payment from your bank account.

Even better, you don’t need to show a minimum personal credit score or minimum time in business. You pay in equal installments over the course of a 12 or 24 week plan, and available credit replenishes as you pay. There is no penalty to repay early.

The business must be U.S. based and you need a 600+ personal FICO score. Other requirements include:

  • $100,000+ in annual revenue
  • A dedicated, separate business checking account
  • Ideally 6 months in business or more

Equipment Financing

Equipment financing is when you use a loan or lease to purchase or borrow hard assets for your business. It is a business financing option you can use to buy any physical asset. Physical assets can include items such as a restaurant oven or a company car.

When you get equipment financing through Credit Suite, you need at least one year in business. You can get approved even with challenged credit, and no financials are required.

$10,000 Loan Options After 3 Years on Business

After your company has been in business for at least 3 years, many more funding options become available. That is, in addition to those already listed. These include many of the more common options you have probably heard of.

SBA Loans

It’ll be easier to get an SBA loan the longer you’re in business. This is because you can more readily show your business is established, and making money. Demonstrating profitability and responsible credit and bank account management will improve your chances of getting an approval for an SBA loan.

SBA loans have great terms, so it is worth it to do what it takes to become eligible.

Term Loans

Banks are often the first place we think of when we think of financing. Yet, big banks only sign off on about 25% of the small business loan applications that come their way. Term loans often have lower interest rates than many other funding options. They also tend to be for higher loan amounts.

Generally speaking, the companies banks end up funding have:

  • Very strong financials
  • Near-perfect credit scores
  • Collateral

There Is More to Fundability Than Time In Business

It’s important to remember that credit issuers look at much more than just time in business. Obviously things like whether or not you pay your bills or even make a profit come under consideration. However, even if you are currently paying bills and making a profit, you may not get approval if you do not have the time in business.

The post How Can I Get a $10,000 Loan for My Business With 1 to 3 Years Operating appeared first on Credit Suite.

Easy Business Loan Approval: 5 Tips to Make it a Reality

You may think applying for a business loan is simply a matter of filling out the application. In truth, it’s more involved than that. In fact, there are many factors in the process that can affect your chances of approval. Some of these factors you cannot control, some you can. Knowing how to handle what you can control will help lead to easy business loan approval.

Easy Business Loan Approval: Questions to Ask Yourself Before You Apply

Before you apply, you need to ask yourself the following questions:

  • What kind of loan do you need?
  • How do you plan to use the funds?
  • What type of lender will you use?
  • Do you even qualify for a business loan?
  • Are there other funding options that will work better right now?
  • Can you afford a business loan?

Now, don’t just ask and answer these questions passively in your head. In contrast, be intentional. The answers will help you apply for the right loan for your business. Truly, this is a huge part of increasing the chances of easy business loan approval.

5 Tips for Easy Business Loan Approval

Once you know the answers to these questions, use these tips to ensure you have the best approval chances possible.

Tip #1: Make Sure Your Business is Set Up to Be Fundable

Really, everything from your business name and contact information to your business website plays a role. Surprisingly, even small details that seem inconsequential can cause a loan application to be delayed or denied altogether.

For example, your business needs its own phone number, and toll free is best. Then, list it in the 411 directory. Also, make sure your business address is a physical address where you can receive mail. Don’t use a P.O. Box or UPS box. Virtual addresses are okay, but some lenders will not accept them. If you run your business from home, you can use your home address.

You also need an EIN, and your business needs to be incorporated. A dedicated business bank account is a must as well. Furthermore, make sure you have all the necessary licenses to operate legally at all levels-federal, state, and local.

If you already have a business website, it needs to be professional. Even more important, make sure it is user friendly and well put together. If a lender sees a poorly put together website, it will not look good. Also, your business email address should have the same URL as your business website. Do not use free hosting services or free email services.

Tip# 2: Consider Collateral Options and Personal Guarantees

Of course, sufficient collateral is one of the best ways to get easy business loan approval. It reduces lender risk, which is one of a lender’s main objectives. Lack of collateral doesn’t necessarily mean denial, but having collateral definitely increases approval chances.

If you have good personal credit, a personal guarantee will for sure improve approval chances. Most traditional lenders will require it anyway. Still, you can sometimes reduce lender reliance on a personal guarantee if you have good business credit.

Tip 3# Evaluate and Improve Business Credit

If you have set up your business to be fundable, you already have a head start on this. To begin building business credit, you need accounts in your business name reporting to the business credit reporting agencies.

Before you can start, you need to get a D-U-N-S number from Dun & Bradstreet. Then, start working with starter vendors to get accounts reporting. This process takes time, so if you do not already have established business credit, and you need a loan now, you may have to rely on collateral and a personal guarantee to get you there.

Still, building business credit is wise, and it’s never too late to start.

Tip# 4: Research Lenders and Products

There are many types of loans and lenders. You need to know which ones will work best for you and your situation. The truth is, applying for the right product for your business, from the right lender, at the right time, will go a long way toward easy business loan approval.

Types of Business Loans: Traditional Term Loans

With a traditional lender term loan, you are almost always going to have to give a personal guarantee.  If your personal credit score isn’t good, approval is unlikely.  Of course, strong collateral can help with that.

So, what kind of personal credit score do you need to have in order to qualify for a traditional term loan? For most, a FICO of 750 is good. Sometimes, you can get approval with a score of 700+. Yet, the terms will not be as favorable.

If you have really great business credit, your lender might be more inclined to be a little more flexible. However, your personal credit score will still weigh heavily on the terms and interest rate.

Types of Business Loans: SBA Loans

These are traditional bank loans, but they have a guarantee from the federal government. The Small Business Administration, or SBA, works with lenders to offer small businesses funding solutions that borrowers may not be able to get based on their own credit history.

Because of the government guarantee, lenders can be more flexible with credit score requirements.  It is possible to get an SBA microloan with a personal credit score between 620 and 640. The trade-off is that the SBA loan application process is lengthy.

Types of Business Loans: Lines of Credit

This is revolving credit, like a credit card. Rates are typically much better than a credit card however. For these, the application and approval process is similar to that of a traditional term loan.

Types of Business Loans: Non-Traditional Lenders

These are lenders other than traditional banks and credit unions that offer term loans and lines of credit. Generally, they offer more flexible approval requirements and a much faster application process. Typically, you can apply online and get approval in as little as 24 hours. Better yet, funds may be in your account within 24 to 48 hours after approval.

These can work well if your personal credit isn’t terrible and you need funding quickly. Additionally. they may be a good option if your NAICS code is high risk.

Knowing the different options, and what is required by each for approval, will help you choose the options that will work best for your needs and that you are most likely to be approved for.

Tip #5: Have a Workable, Professional Business Plan

For easy approval, you have to convince lenders that your business will be a good investment. It’s best to hire professional writers and researchers to help you write your business plan. If you can’t, there are plenty of free resources online to help with a business plan, including templates.

A well put together business plan should include the following:

  • An Executive Summary
  • Description
  • Strategies
  • Market Analysis
  • Analysis of audience
  • Competitive Analysis
  • Plan for Design and Development
  • Plan for Operation and Management
  • Financials

How to Get Easy Approval for a Business Loan

The simplest way to ensure you can easily get the funding you need for your business is to build strong business fundability. To do that, you need to set up your business with a fundable foundation and begin building business credit, among other things.

A business credit specialist can help you assess your current fundability, and guide you through the steps needed to improve it, if necessary. They can also help you find the best financing options for your business based on your current fundability. Get a free consultation today.

The post Easy Business Loan Approval: 5 Tips to Make it a Reality appeared first on Credit Suite.

Top Questions About the Business Loan Underwriting Process Answered

Loan underwriting is the process lenders use to determine the  risk that a borrower will not repay a loan. A higher risk of non-payment means higher interest rates or denial.

Business Loan Underwriting is a Little Different

When it comes to business loan underwriting, underwriters are looking at the owner’s information as well as information related to the business itself. This is more complicated and usually takes longer.

Here are some common questions about the process, and some tips to make things go as smoothly as possible.

Question #1: What Are Underwriters Looking For?

Loan underwriting is not a game of “gotcha. “ Lenders want to make good loans. After all, that’s how they make a profit. They need to see not only that your business can repay the loan, but that there is a high probability you will repay the loan. They also want to see how you will handle repayment if something unexpected happens. Do you have a plan for making payments if things don’t go as planned?

Learn business loan secrets and get money for your business.

Underwriters are asking themselves these questions when they review your application. If you know what they’re looking for, you can include all the information needed on the front end.

Each lender has different criteria when it comes to underwriting small business loans. There really isn’t a standard that applies to every lender. Still, generally lenders are looking at the same types of things when they look at your business. But be aware, they may not weigh all factors the same.

How to Answer Question #1 Most Effectively

  • Provide all requested information.
  • Have financials professionally prepared by an accountant and reviewed by a tax attorney.
  • Fill out the application thoroughly and carefully.

Question #2: What Will I Need to Provide to the Underwriter?

Generally, loan underwriting requires you to provide:

  • Basic personal information, such as your name, address, and Social Security number
  • Your business name or doing business as (DBA) name
  • Your Employer Identification Number (EIN)
  • A copy of your business plan
  • Information about collateral if you’re applying for a secured loan
  • Details about your business, including time in business, annual revenues, number of employees, and more
  • Financial records, including tax returns, bank statements, and/or pay stubs (both personal and business)

How to Answer Question #2 Most Effectively

Write your business plan long before you apply for a loan. Have a mentor or the local Small Business Development Center help you. Also, gather records requested and review the details for accuracy.

Question #3: How Will the Underwriter Use the Data I Provide?

The data you provide for loan underwriting will be used to do the following.

Verify Business Revenue

If there isn’t enough revenue to support debt payments, you aren’t getting the loan. Most lenders have a ratio that helps them calculate how much they are willing to lend to your business.  That is, if they approve the application.

Generally, approval for any amount over 10% of your annual revenues is not likely.  This is especially true for traditional lenders. Of course, it depends heavily on whether you have any other business debt.

Learn business loan secrets and get money for your business.

Verify Personal Credit Score

With traditional lenders, your personal credit score is going to be part of every loan decision. In fact, in some cases it will determine whether or not they will pursue your loan application at all.

Banks generally look for scores in the 700s, though some will go as low as 680. The SBA has a minimum threshold around 650. In contrast, online lenders will go as low as 600 or even 500 in some cases.

If you get approval, the lower your personal credit score, the more expensive the financing. You may also have to provide a personal guarantee or sign off on a UCC blanket lien if your personal credit scores are particularly low.

Verify Collateral

Not all lenders require collateral, but most banks and the SBA do. While the SBA doesn’t always require that you fully collateralize a loan, they will require any collateral you may have available.

Online lenders will often apply a general lien on business assets. Also, most will require a personal guarantee on small business loans.

Determine Personal Equity in the Business

Underwriters may want to see how much money you have invested in the business. Lenders want you to have some personal skin in the game. If the business defaults, you have something to lose too.

In addition, lenders may use the data to determine a number of ratios that can help them in the decision making process.

Debt Service Coverage Ratio

This is a calculation of your business’ income and the total amount of business financing you already have. It is calculated as Business Income/ Business Debt.  If your ratio is below 1.25, it will be difficult to get more financing.

Debt-to-asset Ratio (total debt/ total assets)

This is especially important to underwriting if there isn’t a collateral requirement. It shows whether you have enough assets to cover the loan in the event you default. For example, do you have enough equipment or property to liquidate and cover the loan if you can’t make payments. A ratio of more than 1:1 is favorable.

Loan-to-value Ratio

This only applies if there is a collateral requirement. Lenders really want to see that your collateral is worth at least 20% more than you want to borrow. That’s why you need a down payment of around 20% to buy a new car or purchase a new house.  The lender wants to make sure you meet this ratio.

How to Answer Question #3 Most Effectively

Since you now know the formulas often used in the loan underwriting process, you can have your accountant do the math. It doesn’t make any sense to apply if the numbers aren’t in your favor.  If you are close, it may be worth a shot.

Running the numbers can also give you an idea of what may be required in terms of a personal guarantee or collateral.  This is helpful information to have before you apply.

Question #4: What Are the Dealbreakers?

There are a number of issues that an underwriter may uncover that may can mean “end game” for your loan application.  If you know of any of these issues before you apply, definitely disclose them. Knowing ahead of time will allow the underwriters to take note of mitigating factors as they go. If they come across any of these on their own, it is probably game over.

Learn business loan secrets and get money for your business.

  • Recent business cash advances or loans that are discovered but not disclosed in the month to date bank activity
  • An excessive amount of negative days in the bank activity printout
  • A criminal background history
  • Undisclosed tax liens or those not in a payment plan
  • A recent bankruptcy (within the last 6 months) or any open bankruptcy
  • Unsatisfied excessive or large judgments
  • Less than 50% ownership (depending on the lender)
  • A major drop in revenue
  • Negative landlord references
  • An undisclosed default or a restructured business loan or cash advance

How to Answer Question #4 Most Effectively

Check the documents you’re providing and make sure they’re complete. Material omissions, such as new loans that are not yet on record, need to be disclosed.

That way, the loan manager has all of the information and won’t penalize you for omissions.

Data Drives Loan Decisions

You provide the data to lenders that the underwriters use to make the loan decisions. It is imperative that the data you provide is as complete and accurate as possible. If they find inconsistencies, it is very likely they will simply deny the loan.

Something as small as using an ampersand in your business name in one place, and the word “and” in another, can cause enough doubt to deny a loan.

This is why building fundability is so important. Underwriters want to see your business is established as a separate entity from you, the owner. They need to see accurate and consistent information. Consequently, providing this from the beginning will make their job easier and save you a lot of time and frustration.

The post Top Questions About the Business Loan Underwriting Process Answered 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.

Why do Lenders Prefer Using a Personal Credit Score to Approve a Business Loan?

Your Personal Credit Score Can Make a Difference When You Apply for a Business Loan

If you’re a small business owner, don’t assume your business credit is separate from your personal. If you apply for a loan, lenders will consider it on your personal credit, not your business credit. Your business credit score is considered on its own only if your company generates millions in annual income. Otherwise, assume that your personal credit score will matter.

Solid personal credit is a necessity.  The need to build and maintain it never goes away for most small company owners.

Some lenders (like banks) place more importance on personal scores. This is for checking business loan applications.

To establish your business’ creditworthiness, most lenders first analyze your personal credit score. This happens with organizations in operation for only a few years. It also happens with businesses seeking their first business loan.

So, small business owners must focus on creating a solid business credit profile. This is along with building a good personal credit score.

What is the Difference Between Business Credit Score and Personal Credit Score?

Here are the main variations between company personal credit scores:

  •       Business credit reports use Employer Identification Numbers (EINs). Personal credit reports use Social Security numbers (SSNs).
  •       The ranges of personal and business credit scores are very different. Business scores tend to vary from 0 to 100. The range of personal credit scores is 300 to 850.
  •     Experian manages both business and personal credit. They use separate databases and departments if you have both kinds of credit.
  •       You can freeze or lock personal credit reports. But business credit reports cannot be locked or go under security freeze.
  •       Different rules apply to data used in business and personal credit reports.
  •       Anyone can examine your business scores (they must buy the report and scores). But only you and others who have your authorization can access your personal scores.

When do Lenders Consider a Personal Credit Score for Approving Business Loans?

When reviewing creditworthiness for a business loan, most lenders  check personal credit history.

But some lenders will give your personal credit score less weight than others. Lenders may pay less attention to a poor personal credit score if you already have a track record of solid business credit.

Your personal credit will matter more for a business loan when any (or all) of the following are true:

a. If You’re Seeking a Loan from a Bank or Other Conventional Lender

You should assume banks have strict lending rules and often aren’t too flexible. But private lenders offer financial help. It’s in the form of business loans with low credit requirements. They provide funds considering a business owners’ personal score. This is even if the business score is low. Here, conventional lenders may check personal credit scores to offer you a business loan with flexible terms.

b. If Your Business is a Startup or Small in Nature

If your business score does not have enough info for lenders to check credibility, they will place a higher value on personal scores.

This can be the case with sole proprietorships or small businesses with few employees. Here, it may be hard for a conventional lender to distinguish between your business credit report and personal credit reports.

c. Your Personal Credit Score is Relatively Low

Even if you have a few old negative entries on your personal credit report, getting a business loan shouldn’t be tough. If your business’s credit history is excellent, then it shouldn’t be a problem.

But too many negative items on your personal credit history may damage your score. A low personal credit score is something a lender will notice and consider as a risk.

Your personal credit score reflects how you manage your personal credit liabilities. But some may argue that your personal credit score has nothing to do with how your business operates its business credit liabilities.

As a business owner, understand how your credit score is calculated, and how it’s used when you apply for a credit. And understand what you should do to improve it.

How is a Personal Credit Score Calculated?

The Federal Government improved credit reporting quality with the Fair Credit Reporting Act in 1970.

The consumer credit bureaus collect information from a consumer’s credit profiles to create FICO scores. Experian, Transunion, and Equifax are the three largest credit bureaus. These three major credit bureaus maintain the same basic formula to rate your credit. A personal credit score ranges from 300 to 850 and is rarely identical.

They calculate your FICO score using this basic, widely used formula:

Payment History (35%)

Late payments, judgments, and bankruptcies are problematic. So are debt settlements, repossessions, charge-offs, and liens in your credit report. They will lower your personal credit score.

Debt Owed (30%)

Your personal credit score also depends on your debt-to-credit limit ratio. And it depends on the number of credit accounts, the total amount of credit balances, and the amount paid off on installment loans.

Credit History (15%)

Your credit history plays an integral part in building your credit score. The average age of the accounts and the length of your oldest credit account are the two most important criteria. The longer (or older) the file is, the better. This is because the score tries to forecast future creditworthiness based on past credit history.

Credit Types (10%)

Having different types of credit shows your ability to handle many credit accounts. These types include revolving, installment, and mortgage credit. It will definitely have a positive impact on your credit score.

New Credit Accounts (10%)

Each new “hard” inquiry on your credit report may have an adverse effect and may lower your score by 10%. Per Experian, these inquiries may stay on your report for a few years. But they  will have no impact on your credit score after the initial year.

How Does This Information Build Your Credit Score?

Credit bureaus collect personal information like your name, date of birth, location, occupation, and more. They’ll also prepare a list of information that the creditors provide. Other information, like judgments or bankruptcy, will appear on your credit reports. It becomes part of your personal credit score. When you apply for new credit, your creditor will see all that info in your credit report and check your score.

If you find any inaccurate data reported, the credit bureaus have procedures in place to correct verifiable mistakes. Amendments to the Fair Credit Reporting Act in 1996 allow you to put a 100-word statement on any report that includes an item you dispute.

A range of factors can drive a bad credit score, including a divorce, severe illness, or loss of employment. This allows you to ensure that potential creditors are aware of the information.

Here’s what a potential creditor sees when they look at your score:

800-850 (Exceptional)

You should expect lenders to treat you like a king! With a credit score above 800, you can choose the best credit alternatives for your needs, and the best interest rates, from any lender you choose..

740-799 (Very Good)

If you have a credit score inside this range, lenders will treat you as a low-risk borrower. You can get a loan from almost any big lender with affordable rates. With this credit score, you can choose the best business loan that fits your business needs.

670-739 (Good)

This is a good score, and many people in the United States fall into this category. With this score, a borrower can hope to have more choices and approvals from various lenders.

580-669 (Fair)

This is a score that indicates a significant level of risk. A small business loan is feasible, but the interest rates will often be higher. If your score is in this range, you will have fewer possibilities than those with a higher level.

Most conventional lenders will not consider borrowers in this group for a small business loan. A personal credit score of 660 is the lowest that the SBA will typically consider.

300-579 (Very Poor)

Borrowers with this credit score can access some credit. But it’s considered a high-risk credit score. So there will likely be fewer possibilities and higher interest rates. If your score falls in this range and you want to get a business loan, consider offering some collateral.

How To Improve Your Personal Credit Score?

There is no simple solution to fix your personal credit score issues. But that doesn’t imply you can’t increase your score with time and effort. Here are six strategies to improve your personal credit score:

Analyze Your Score

You are entitled to get a free credit report once a year from annualcreditreport.com. You can get your credit report as many times as you want from all three major credit reporting agencies. These bureaus provide credit monitoring services for an affordable fee. Get your report from them and analyze it properly.

Make Good Use of Credit

This may sound oversimplified, but it’s critical. Resist the urge to use all your credit limits all the time. This is so even if you pay off the total outstanding debt balance every month through credit card debt consolidation. Using all the available credit further can damage your credit score.

Keep credit usage to roughly 15% of your available credit limit to increase your credit score.

Make Your Payments On Time

This is most likely the best and most successful strategy to improve your score. How fast you make payments and satisfy your liabilities makes up 35% of your score. A single late payment can significantly reduce your credit score.

Do Not Apply for Excess Credit

Applying for unnecessary credit reduces your credit score. So if you’re attempting to raise your score, it’s not a good idea.

Don’t Transfer Balances Too Often

Transferring balances from one credit card to another does not affect your credit score. But, it’s generally known as a wrong financial move that could harm your personal credit. Frequently transferring balances can put a bad impression on your future creditors.

Have Patience and Keep Trying

Improving your credit score requires strong determination and hard work. Your constant effort over six months or even a year can make a significant difference. But missing a payment or two will almost certainly lower your credit score fast.

About the Author: 

Lyle Solomon has considerable litigation experience. He has substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California. He now serves as a principal attorney for the Oak View Law Group in California.

The post Why do Lenders Prefer Using a Personal Credit Score to Approve a Business Loan? appeared first on Credit Suite.

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Get the Best VA Small Business Loan for Your Business

Yes, You Can Get VA Small Business Loan—Here’s How

Veteran-owned businesses tend to be small, and of course they require working capital. But where can veterans get a VA small business loan?

Programs for Veterans to Get a VA Small Business Loan and More

Veterans can get a VA business loan through entities like:

  • The US government (SBA)
  • Private websites
  • Online lenders

Plus, there are programs not specifically for small business loans for veterans which they may qualify for as well.

Get a VA Small Business Loan via an SBA Veterans Advantage Guaranteed Loan

The SBA provides fee relief on small-dollar loans. This helps to reduce barriers for veteran-owned small business, so they can access capital and create jobs. The SBA uses a credit scoring model to help reduce underwriting costs and processing time for a VA SBA loan.

For loans of $150,000 or less, the upfront guaranty fee is zero. The upfront guaranty fee is also zero for SBA Express Loans. For loans not through SBA Express, the upfront guaranty fee for loans to veteran-owned small businesses for $150,001—$500,000 (inclusive) is 50% less than the upfront guaranty fee for non-veteran owned small businesses. For loans for over 12 months, the fee is 1.5% of the guaranteed part. And for loans for 12 months or less, the fee is 0.125% of the guaranteed part.

Details

For loans of $500,001—$5,000,000 (inclusive), upfront guaranty fees for 7(a) loans made to veteran-owned small businesses depend on the loan amount and the loan’s. For loans with a term of over 12 months, guaranty fees are:

  • Loans of $500,001—$700,000: 3% of the guaranteed part
  • Loans of $700,001—$5,000,000: 3.5% of the guaranteed part up to $1 M
  • Plus 3.75% of the guaranteed part over $1,000,000

For loans for 12 months or less, the guaranty fee is 0.25% of the guaranteed part.

Qualifying for SBA Veterans Advantage

A small business must be at least 51% owned and controlled by a person(s) in these groups:

  • Honorably discharged veterans
  • Active Duty Military service members eligible for the military’s Transition Assistance Program (TAP)
  • Active Reservists and/or active National Guard Members; or
  • Current spouse of any veteran, Active Duty service member, Reservist, National Guard member, or the widowed spouse of a service member who died while in service or due to a service-connected disability

FYI, if you’re looking for a Patriot Express loan, the SBA doesn’t offer those anymore.

Get a VA Small Business Loan from the Military Reservist Economic Injury Disaster Loan Program (MREIDL)

The Office of Veterans Business Development (OVBD) administers this program. Eligible small businesses can get loans up to $2 million. Pay a fixed 4% interest rate with a maximum repayment term of 30 years. The purpose of these loans is to cover operating costs a business cannot meet due to the loss of an essential employee called to active duty in the Reserves or National Guard. It comes directly from government benefits.

Or get a VA Small Business Loan from the Service-Disabled Veteran-Owned Small Business Concern Program

Government financing can also come in the form of preferences for contracting work. The federal government’s goal is to award at least 3% of all federal contracting dollars to service-disabled veteran-owned small businesses each year. To qualify, businesses must be at least 51% owned and controlled by one or more service-disabled veterans. And one or more service-disabled veterans must manage day-to-day operations and make long-term decisions. Eligible veterans must have a service-connected disability. These are some of the best business loans for disabled veterans.

SBA Microloans Can Be a Good Alternative to a VA Small Business Loan (If You Do Not Need Too Much)

Available to both veterans and non-veterans, the SBA provides microloans to small businesses that cannot typically qualify for other lending options. SBA microloans currently go up to $50,000.

Microloans often have higher interest rates of 8%—13%. Often, a microloan requires collateral and heavy paperwork, including a business plan, various tax returns and financial projections for the business. Average SBA microloan size is about $13,000.

Supplement a VA Small Business Loan with a Grant from The StreetShares Foundation

This is a 501(c)(3) nonprofit organization. Its programs provide access to capital opportunities, educational content, mentors, coaching, and networking events. Its programs serve military community entrepreneurs nationwide. Their VA small business grant program, the Veteran Small Business Award, provides financial support to help veterans start or grow small businesses.

The StreetShares Veteran Small Business Award

Apply via video pitch. Tell the Foundation about the business and its social impact on the military community. Convey, in the written application or video pitch, your strategy for resilience in response to rapid market change prompted by the pandemic crisis.

They also evaluate your nonprofit or business entity on its positive social, community, educational, military-transition, veterans’ employment, health & wellness, or veterans’ mental health/spiritual impact, on the American military and veteran community. This is in addition to or in conjunction with business or nonprofit functions. Awards run $4,000—$15,000.

The StreetShares Foundation Military Entrepreneur Challenge

Qualified applicants submit their pitch on video. 8—15 finalists are chosen, then voted on, at the Foundation website. Awards are as follows:

  • $15,000 for first place
  • $4,000 for second place
  • $2,500 for third place

Qualifying for The StreetShares Foundation Military Entrepreneur Challenge

Applicant must be a veteran, reserve or transitioning active duty member of the US Armed Forces. Or they can be a spouse of a military member or the child or immediately family member of a Military Member who died on active duty. Applicants must own at least 51% of the business entity described in the application. Grant funding is for veterans and military spouses who are low-income or otherwise lack financial means and have a goal to start or grow an early-stage business or nonprofit.

So FYI, the USAA small business loan program with Street Shares has ended.

Get Work Vessels for Vets and Use a VA Small Business Loan for Other Expenses

This charity offers grants to veteran-owned small businesses. Their purpose is to help returning vets transition from military service to the civilian workforce. The program provides new or used equipment (adapted to accommodate injuries if needed) to returning veterans  starting a non-farming business. So this equipment has been everything from laptop computers to commercial fishing boats.

More Programs

They also have a program for vets starting farms or ranches, and a program for nonprofits serving veterans. Still, they give preference to post-9/11 returning combat veterans. To qualify, you must provide a business plan.

Average vessel value runs about $5,000—$6,000. But the charity defines ‘vessel’ as anything a vet would need to do business, like tools or farm fencing.  Charity Navigator gives them a failing score, but that may be more due to a lack of information versus anything nefarious.

Hivers and Strivers

Hivers and Strivers is an Angel Investment Group. They focus on early-stage investments to support start-up companies founded and run by graduates of US Military Academies. Also, they typically invest $250,000—$1 M in a single funding round and provide active involvement.

Hivers and Strivers involvement includes serving as board members and advisors and providing counsel and offering expertise. Venture Capital for Veterans will soon take over funding. Because they are affiliated with Hivers and Strivers.

Veteran Ventures Capital

This is an investment group. Any veteran-owned businesses can apply for funding. They also offer a full range of consulting services to ensure business success. As a Service-Disabled Veteran Owned Small Business, they also have ties to government contracting to aid veteran entrepreneurs in expanding their opportunities to work with federal agencies.

Through their government solutions branch, they offer help with budgeting and professional staffing, along with product procurement, and getting government contracts.

Veterans Business Fund

VBF is a not-for profit organization, established to aid veterans by providing supplemental capital required to satisfy the equity requirements for a small business loan. The VBF provides capital in the form of a non-interest bearing loan with very favorable repayment terms. Currently, the VBF is not taking applications, while they go through a fundraising round.

More Funding Choices

So there’s more out there than veteran business loans and grants. Veterans and non-veterans alike may qualify for:

  • Merchant cash advances (if their business has incoming revenues)
  • Crowdfunding is an option for all, but conventional businesses tend to not do so well
  • Veteran and non-veteran business owners can also sell equity in their business to angel investors for funding

Yet more options include collateral-based funding, business credit, and our credit line hybrid. Our credit line hybrid is a form of unsecured funding—good for both veterans and non-veterans. Get business funding without having to supply bank statements or credit stubs.

Getting a VA Small Business Loan: Takeaways

VA loans and other financing are out there. And you can get grants or even venture capital investment in your business. There are also nonprofits which give money to veteran-owned businesses. But never forget about the SBA and their programs, and programs not specific to veterans, like our credit line hybrid.

The post Get the Best VA Small Business Loan for Your Business appeared first on Credit Suite.

Why do Lenders Prefer Using a Personal Credit Score to Approve a Business Loan?

Your Personal Credit Score Can Make a Difference When You Apply for a Business Loan If you’re a small business owner, don’t assume your business credit is separate from your personal. If you apply for a loan, lenders will consider it on your personal credit, not your business credit. Your business credit score is considered … Continue reading Why do Lenders Prefer Using a Personal Credit Score to Approve a Business Loan?

Why do Lenders Prefer Using a Personal Credit Score to Approve a Business Loan?

Your Personal Credit Score Can Make a Difference When You Apply for a Business Loan

If you’re a small business owner, don’t assume your business credit is separate from your personal. If you apply for a loan, lenders will consider it on your personal credit, not your business credit. Your business credit score is considered on its own only if your company generates millions in annual income. Otherwise, assume that your personal credit score will matter.

Solid personal credit is a necessity.  The need to build and maintain it never goes away for most small company owners.

Some lenders (like banks) place more importance on personal scores. This is for checking business loan applications.

To establish your business’ creditworthiness, most lenders first analyze your personal credit score. This happens with organizations in operation for only a few years. It also happens with businesses seeking their first business loan.

So, small business owners must focus on creating a solid business credit profile. This is along with building a good personal credit score.

What is the Difference Between Business Credit Score and Personal Credit Score?

Here are the main variations between company personal credit scores:

  •       Business credit reports use Employer Identification Numbers (EINs). Personal credit reports use Social Security numbers (SSNs).
  •       The ranges of personal and business credit scores are very different. Business scores tend to vary from 0 to 100. The range of personal credit scores is 300 to 850.
  •     Experian manages both business and personal credit. They use separate databases and departments if you have both kinds of credit.
  •       You can freeze or lock personal credit reports. But business credit reports cannot be locked or go under security freeze.
  •       Different rules apply to data used in business and personal credit reports.
  •       Anyone can examine your business scores (they must buy the report and scores). But only you and others who have your authorization can access your personal scores.

Demolish your funding problems with 27 killer ways to get cash for your business.

When do Lenders Consider a Personal Credit Score for Approving Business Loans?

When reviewing creditworthiness for a business loan, most lenders  check personal credit history.

But some lenders will give your personal credit score less weight than others. Lenders may pay less attention to a poor personal credit score if you already have a track record of solid business credit.

Your personal credit will matter more for a business loan when any (or all) of the following are true:

a. If You’re Seeking a Loan from a Bank or Other Conventional Lender

You should assume banks have strict lending rules and often aren’t too flexible. But private lenders offer financial help. It’s in the form of business loans with low credit requirements. They provide funds considering a business owners’ personal score. This is even if the business score is low. Here, conventional lenders may check personal credit scores to offer you a business loan with flexible terms.

b. If Your Business is a Startup or Small in Nature

If your business score does not have enough info for lenders to check credibility, they will place a higher value on personal scores.

This can be the case with sole proprietorships or small businesses with few employees. Here, it may be hard for a conventional lender to distinguish between your business credit report and personal credit reports.

c. Your Personal Credit Score is Relatively Low

Even if you have a few old negative entries on your personal credit report, getting a business loan shouldn’t be tough. If your business’s credit history is excellent, then it shouldn’t be a problem.

But too many negative items on your personal credit history may damage your score. A low personal credit score is something a lender will notice and consider as a risk.

Your personal credit score reflects how you manage your personal credit liabilities. But some may argue that your personal credit score has nothing to do with how your business operates its business credit liabilities.

As a business owner, understand how your credit score is calculated, and how it’s used when you apply for a credit. And understand what you should do to improve it.

Demolish your funding problems with 27 killer ways to get cash for your business.

How is a Personal Credit Score Calculated?

The Federal Government improved credit reporting quality with the Fair Credit Reporting Act in 1970.

The consumer credit bureaus collect information from a consumer’s credit profiles to create FICO scores. Experian, Transunion, and Equifax are the three largest credit bureaus. These three major credit bureaus maintain the same basic formula to rate your credit. A personal credit score ranges from 300 to 850 and is rarely identical.

They calculate your FICO score using this basic, widely used formula:

Payment History (35%)

Late payments, judgments, and bankruptcies are problematic. So are debt settlements, repossessions, charge-offs, and liens in your credit report. They will lower your personal credit score.

Debt Owed (30%)

Your personal credit score also depends on your debt-to-credit limit ratio. And it depends on the number of credit accounts, the total amount of credit balances, and the amount paid off on installment loans.

Credit History (15%)

Your credit history plays an integral part in building your credit score. The average age of the accounts and the length of your oldest credit account are the two most important criteria. The longer (or older) the file is, the better. This is because the score tries to forecast future creditworthiness based on past credit history.

Credit Types (10%)

Having different types of credit shows your ability to handle many credit accounts. These types include revolving, installment, and mortgage credit. It will definitely have a positive impact on your credit score.

New Credit Accounts (10%)

Each new “hard” inquiry on your credit report may have an adverse effect and may lower your score by 10%. Per Experian, these inquiries may stay on your report for a few years. But they  will have no impact on your credit score after the initial year.

How Does This Information Build Your Credit Score?

Credit bureaus collect personal information like your name, date of birth, location, occupation, and more. They’ll also prepare a list of information that the creditors provide. Other information, like judgments or bankruptcy, will appear on your credit reports. It becomes part of your personal credit score. When you apply for new credit, your creditor will see all that info in your credit report and check your score.

If you find any inaccurate data reported, the credit bureaus have procedures in place to correct verifiable mistakes. Amendments to the Fair Credit Reporting Act in 1996 allow you to put a 100-word statement on any report that includes an item you dispute.

A range of factors can drive a bad credit score, including a divorce, severe illness, or loss of employment. This allows you to ensure that potential creditors are aware of the information.

Here’s what a potential creditor sees when they look at your score:

800-850 (Exceptional)

You should expect lenders to treat you like a king! With a credit score above 800, you can choose the best credit alternatives for your needs, and the best interest rates, from any lender you choose..

740-799 (Very Good)

If you have a credit score inside this range, lenders will treat you as a low-risk borrower. You can get a loan from almost any big lender with affordable rates. With this credit score, you can choose the best business loan that fits your business needs.

670-739 (Good)

This is a good score, and many people in the United States fall into this category. With this score, a borrower can hope to have more choices and approvals from various lenders.

580-669 (Fair)

This is a score that indicates a significant level of risk. A small business loan is feasible, but the interest rates will often be higher. If your score is in this range, you will have fewer possibilities than those with a higher level.

Most conventional lenders will not consider borrowers in this group for a small business loan. A personal credit score of 660 is the lowest that the SBA will typically consider.

300-579 (Very Poor)

Borrowers with this credit score can access some credit. But it’s considered a high-risk credit score. So there will likely be fewer possibilities and higher interest rates. If your score falls in this range and you want to get a business loan, consider offering some collateral.

Demolish your funding problems with 27 killer ways to get cash for your business.

How To Improve Your Personal Credit Score?

There is no simple solution to fix your personal credit score issues. But that doesn’t imply you can’t increase your score with time and effort. Here are six strategies to improve your personal credit score:

Analyze Your Score

You are entitled to get a free credit report once a year from annualcreditreport.com. You can get your credit report as many times as you want from all three major credit reporting agencies. These bureaus provide credit monitoring services for an affordable fee. Get your report from them and analyze it properly.

Make Good Use of Credit

This may sound oversimplified, but it’s critical. Resist the urge to use all your credit limits all the time. This is so even if you pay off the total outstanding debt balance every month through credit card debt consolidation. Using all the available credit further can damage your credit score.

Keep credit usage to roughly 15% of your available credit limit to increase your credit score.

Make Your Payments On Time

This is most likely the best and most successful strategy to improve your score. How fast you make payments and satisfy your liabilities makes up 35% of your score. A single late payment can significantly reduce your credit score.

Do Not Apply for Excess Credit

Applying for unnecessary credit reduces your credit score. So if you’re attempting to raise your score, it’s not a good idea.

Don’t Transfer Balances Too Often

Transferring balances from one credit card to another does not affect your credit score. But, it’s generally known as a wrong financial move that could harm your personal credit. Frequently transferring balances can put a bad impression on your future creditors.

Have Patience and Keep Trying

Improving your credit score requires strong determination and hard work. Your constant effort over six months or even a year can make a significant difference. But missing a payment or two will almost certainly lower your credit score fast.

About the Author: 

Personal Credit Score Credit SuiteLyle Solomon has considerable litigation experience. He has substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California. He now serves as a principal attorney for the Oak View Law Group in California.

The post Why do Lenders Prefer Using a Personal Credit Score to Approve a Business Loan? appeared first on Credit Suite.