7 Types of Small Business Loans for Women with Bad Credit

If you have bad credit, it can be hard to find small business loans regardless of gender. If you are a female business owner, with bad credit, it may help to look for lenders that offer certain types of loans, rather than small business loans for women with bad credit specifically.

What’s Best As Far as Small Business Loans for Women With Bad Credit

There are certain types of funding that work well for all business owners with bad credit, including women.

Small Business Loans for Women with Bad Credit: Credit Line Hybrid

The credit line hybrid is unsecured business financing. It is available to pretty much anyone for any type of business expense. You can use it for real estate, equipment, working capital, and even startup expenses. Not only that, but there is no security required. Furthermore, there is no down payment, and you do not have to provide income documentation. It is completely no-doc financing.

Now, you do have to have strong personal credit. A credit score of 680+ is necessary. Also, there cannot be any late payments in the past 12 months, there can be no open collections or bankruptcies, and there should be less than 4 inquiries in the past 6 months on your consumer credit report. There also has to be at least 2 open credit cards with a $2,000 limit or higher with 2 years of good payment history.

Where does the part about bad credit come into play? Here it is. If you do not meet these requirements, you can take on a credit partner that does meet them. The payments will still be reported on the business’s credit report, so business credit will build whether you get the financing yourself or through a credit partner.

The best part is, amounts can range up to $150,000, and often interest rates are as low as 0% for the first 6 to 18 months.

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

Small Business Loans for Women with Bad Credit: Business Revenue Lending

If your business has consistent revenue of $120,000 per year or more, you may qualify for this type of funding. Lenders verify revenue using bank statements. There can be no recent bankruptcies, but the minimum credit score to qualify is as low as 500.

A business must also be in operation for a year or more, and they must do over 5 small transactions each month to get business revenue financing.

Small Business Loans for Women with Bad Credit: Merchant Cash Advance

If your business accepts credit card payments and you have at least a 500 FICO, you could get up to $750,000 in a merchant cash advance. Credit rates are usually lower compared to traditional financing as well.

Your business must bring in $100,000 or more per year in credit card sales, and typically you can get approval equal to one months credit card financing volume.

Small Business Loans for Women with Bad Credit: Account Receivable Financing

Outstanding account receivables can also be a source of funding for your business. Get as much as 80% of receivables advanced in less than 24 hours. You get the rest of the accounts receivable amount once you collect full payment for the invoice. Closing takes 2 weeks or less.

Receivables should be with the government or another business. Getting financing with receivables from individuals is not as easy. If you also have purchase orders, then you can get financing to have those filled. You won’t need to use your cash flow to do so.

Small Business Loans for Women with Bad Credit: Equipment Financing

You can secure this type of financing by using existing equipment or new equipment you want to purchase as collateral. Funding is available up to $10 million. Terms range from 5 to 60 months, and you need a minimum 550 FICO.

The equipment must be new, and most types of equipment are acceptable, including software.

You’ll need to provide details on the equipment to be financed and, depending on the loan amount and certain risk factors, you may need to show 2 years corporate and personal tax returns.

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

Small Business Loans for Women with Bad Credit: Enterprise SBA Loans

For these loans you have to have collateral worth up to at least 50% of the loan amount, but you only need a FICO of 620. There also can be no bankruptcies in the past 4 years. Only for profit companies qualify, and they must have positive trends in sales growth. Generally amounts are available of up to $12 million with terms up to 25-years.

Small Business Loans for Women with Bad Credit: Real Estate Financing

Likewise, you probably will not be financing real estate with business credit cards, even if it is 0 interest. You can get real estate financing in amounts up to $10 million with terms from 6 to 60 months and interest rates as low as 6%. You will need a 500 minimum credit score, and there are a few other requirements.

How to Decide Which Option is Best for You

If you are looking for business loans for women with bad credit, it’s fair to say you aren’t that confident in your credit score. A business credit expert can help you not only determine which of these options is best for your business, but also help you build fundability so you don’t have to worry about finding funding for your business. If your business is fundable, you can get all the business financing you will ever need.

Grants for Women Business Owners

One area where you will find funding specifically for women, and credit isn’t an issue, it grants.

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

SBA Women’s Business Centers

In addition to helping with loans, the SBA Women’s Business Centers also help women entrepreneurs get access to other types of funding. Some lend money or award grants directly, while others help connect women entrepreneurs with financial institutions. Take a look at their website to find out more on how to apply for women owned business grants through this network.

Eileen Fisher Women Owned Business Grants

The clothing brand Eileen Fisher hands out $100,000 per year to 10 women-owned businesses. To qualify, a woman must have at least 51% ownership, and the business must be in operation for at least three years. Also, it must bring in less than $1 million per year in revenue and have a focus on environmental or social change.

Amber Grant

The Amber Grant awards $500 to $1,000 per month to a woman-owned business. One of the recipients also receives an additional $10,000 grant at the end of the year. Applicants only need to tell their story and turn it in with a $15 application fee.

#GIRLBOSS Foundation Grant

Specifically for woman-owned businesses in fashion, music, and art, the #GIRLBOSS small business grant awards $15,000. They also offer exposure via the Girlboss website and social media platforms. Judges rate those applying on creativity, business savvy, planning, innovation in the field, need, and where they plan to work.

Cartier Women’s Initiative Award

The Cartier Women’s Initiative Award is $100,000 for first place and $30,000 for second place. They award the grant to 18 female business owners from around the world each year. Women business owners who are just getting started may qualify.

Business Loans For Women With Bad Credit Do Exist

They really do. They just aren’t necessarily for women exclusively. Still, if you find something that will work with bad credit, you’ve found gold. It’s even better if it can be used to build business credit at the same time.

It does no good to find funding for bad credit once. You need to work on the bad credit so you can eventually get the best terms and rates. This is where a business credit expert can be exceptionally helpful.

The post 7 Types of Small Business Loans for Women with Bad Credit appeared first on Credit Suite.

SBA Loans for Equipment Loans?

There are so many different types of business loans out there, it can be hard to figure out which type you actually need. Even harder is figuring out which type you actually qualify for. For example, if you need to buy new equipment, equipment loans would seem to be the way to go, right? Even then, do you go with SBA loans, traditional loans, private lenders?

SBA Loans for Equipment Loans: When Do You Need One and What to Do When You Don’t Qualify

The truth is, it’s not always so simple. Sometimes, traditional loans work best for equipment purchases. However, there are occasions when other options may fit your specific situation. But, when are those times? Furthermore, what are the other options?

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

SBA Loans for Equipment: What are Equipment Loans?

Equipment loans, whether SBA loans or not, are loans that are secured by the equipment being financed. For example, if you bought a new industrial freezer and financed it with an equipment loan, then the freezer would serve as collateral for that loan.

The beauty of equipment loans is that you get the lower interest rates and better terms that typically come with secured financing. The problem is, that isn’t always enough to qualify.

SBA Loans for Equipment: What Qualifies as Equipment?

Equipment is not attached to the property, but the assets are longer term generally speaking. This includes things like heavy duty copy machines, industrial freezers and ovens, and more. These things can be used as collateral to secure a loan to purchase them.

SBA Loans for Equipment: When Do Equipment Loans Work Better Than Other Loans?

Using the equipment as security doesn’t get you out of needing to meet requirements like minimum credit score and income. However, if you do meet these requirements and therefore qualify for the loan, the collateral can help you snag better terms. Interest rates will almost definitely be lower, depending on other factors.

SBA Loans for Equipment: Other Options for Equipment Loans?

What if you don’t meet traditional requirements for equipment loans? There are other options.

SBA Loans: Options for Equipment Loans

The SBA has a few loans programs that work well for equipment financing.

7(a) Loans

This is the main program at the Small Business Administration. Through it, borrowers can get federally funded term loans up to $5 million. This money is available for expansion, working capital, and other things as well as, purchasing equipment. Banks, credit unions, and other specialized institutions in partnership with the SBA process these loans and disburse the cash.

The minimum credit score to qualify is 680. There is also a required down payment of at least 10% for the purchase of a business, commercial real estate, or equipment. The minimum time in business is 2 years. In the case of startups, business experience equivalent to two years will work.

This is the most popular SBA loan program. THis is due in part to the fact that funds are allowed to be used toward a broad range of projects, including buying equipment.

504 Loans

The 504 loan program offers loans up to $5 million. Money can buy equipment, as well as facilities or land. Generally, these loans are used for expansion. Private sector lenders or nonprofits process and disburse the funds. This program works well for commercial real estate purchases especially, but also for equipment.

Terms for 504 Loans range from 10 to 20 years, and funding can take from 30 to 90 days. They require a minimum credit score of 680, and collateral is the asset it is financing. There is also a down payment requirement of 10%, which can increase to 15% for a new business.

There is a requirement you be in business at least 2 years, or that management has equivalent experience if the business is a startup.

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

Microloans

Microloans are just what they sound like. They are small loans, up to $50,000, that can be used to purchase equipment, start a business, buy inventory, or just as working capital. Community based non-profits administer microloan programs as intermediaries. The financing comes directly from the Small Business Administration. They can take upwards of 90 days to fund, and the minimum credit score is 640.

Credit Line Hybrid

If SBA loans will not work for your equipment needs, a credit line hybrid might. It allows you to fund your business without putting up collateral. Furthermore,you only pay back what you use. It is unsecured, no-doc funding. That means you do not have to turn in any financials.

How hard is it to qualify? Not as hard as you may think. You need good personal credit, but that is relative. Your personal credit score should be at least 685, which is lower than what is required by most traditional lenders. In addition, you can’t have any liens, judgments, bankruptcies or late payments.

Also, in the past 6 months you should have fewer than 5 credit inquiries. You need to have less than a 45% balance on all business and personal credit cards as well. It’s preferred that you have established business credit, but not absolutely necessary.

Now, if you don’t meet all of the requirements, you can take on a credit partner that does. Many business owners work with a friend or relative to fund their business. If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding.

Credit Line Hybrid Benefits

There are a ton of benefits to using a credit line hybrid. Most notably, it is unsecured, meaning you do not have to have any collateral to put up. Then, as mentioned, the funding is “no-doc.” This means you do not have to provide any bank statements or financials.

Not only that, but typically approval is up to 5x that of the highest credit limit on the personal credit report. Additionally, often you can get interest rates as low as 0% for the first few months, allowing you to put that savings back into your business.

The process is pretty fast. One other benefit is this. The approval for multiple credit cards creates competition. This makes it easier, and even likely if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months.

Online Lenders for Equipment Loans?

Another option if SBA loans will not work is an online lender. This is especially true if your personal credit score isn’t great.

Even if you have great business credit, most term loans and many lines of credit require a personal credit check. They may take your business credit into account, but if your personal credit stinks, it won’t help you much. Online lenders tend to have lower minimum personal credit score requirements than traditional lenders.

An added benefit is, an online lender will typically send you the funds faster. Sometimes you can have the money in as little as a few days, with approval coming in as little as 24 hours.

An Online Lender Could be the Answer to Your Funding Needs

If you can go with a traditional lender, great. They often have better rates and terms. However, if you, like many business owners, do not have that option, an online lender may be the perfect solution for equipment financing. Approval requirements allow many more borrowers to get their funds quickly and easily. Take into account the following factors:

How much do you need?
What do you need the funds for?
What is your credit score?
How much of a payment/ interest rate can your budget handle?

It’s also important to note, there are a lot of predatory lenders online. You have to be careful. The list above is a great starting point, but don’t stop there. There are a lot of options, so be sure to research.

Some of our Our Best Picks for Online Lenders

Fora Financial

Founded in 2008 by college roommates, online lender Fora Financial now funds more than $1.3 million in working capital around the United States. There is no minimum credit score, and there is an early repayment discount if you qualify.

The minimum loan amount is $5,000 and the maximum is $500,000. The business must be at least 6 months in operation and the monthly revenue has to be $12,000 or more. There can be no open bankruptcies.

OnDeck

Obtaining financing from OnDeck is quick and easy. First, you apply online and receive your decision once application processing is complete. If you receive approval, your loan funds will go directly to your bank account. The minimum loan amount is $5,000 and the maximum is $500,000.

Just like any other online lender, they do have certain requirements to qualify for a loan. For example, a personal credit score of 600 or more. Also, you must be in business for at least one year. Annual revenue must be at or exceed $100,000. In addition, there can be no bankruptcy on file in the past 2 years and no unresolved liens or judgements.

Kabbage

Kabbage is an online lender. They offer a small business line of credit that can help businesses meet their goals quickly. The minimum loan amount is $500, and they do not exceed $250,000. You must be in business for at least one year and have $50,000 or more in annual revenue, or $4,200 or more in monthly revenue, over the last 3 months.

Kabbage is great if you need cash quickly. Also, their non-traditional approach puts less weight on your credit score, so they may work better for some borrowers than other lenders.

Rates start at 6% and go up to 22%. APR works out to 8 to 25%, and there is a 3 to 5 % origination fee.

Advantages are the soft credit pull and the fact that they will look at factors other than your personal credit if your FICO score is low. Another benefit is that Bond Street can offer very large loans if you qualify. Disadvantages are the longer time in business requirement and high APR.

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

Lending Club

Popular online lender Lending Club offers term loans. Business loans from $5,000 to $300,000. Loan terms are 1 to 5 years.

Get a quote in less than 5 minutes. Funds are available in as little as 48 hours if approved. There are no prepayment penalties.

Annual Revenue must be $75,000 or more. You must be in business for 2 years or more. Personal FICO score of 620 or better is required.

Rates of 5.99% to 29.99%. Total annualized rates starting at 8%.

Advantages are that the annual revenue requirement isn’t too high. Funds are available quickly. Disadvantages include high maximum rates.

Funding Circle

Funding Circle is a way to apply for SBA funds online. To get started with Funding Circle, you must meet the following requirements.

In business for more than 3 years
At least $500,000 in annual revenue
No federal tax liens
680 FICO for personal Guarantor
Positive book value (assets > liabilities)

SBA Loans are Just One Way to Finance Equipment

Traditional equipment loans are the lowest cost way to finance equipment. They won’t work for everyone though. If they will not work for you, there are other options. The SBA offers loan programs that work well for equipment financing, and online lenders can be a possibility as well.

Perhaps the most unique and under-utilized option is the credit line hybrid. When you use this option, you do not have to use the equipment as collateral, and sometimes you can get 0% interest, at least initially.

It will likely take some time to figure out which option for equipment loans will work best for your business. The first step is finding out that there are, in fact, options.

The post SBA Loans for Equipment Loans? appeared first on Credit Suite.

Recession Period Business Loans: Don’t Let Bad Credit Stop You

COVID-19 threw our economy into a tailspin, and the resulting recession isn’t leaving anytime soon. However, even during a recession period funding is available. You just have to know how to get it.

Business Loans are Possible Even with Bad Credit in a Recession Period

In a recession period, if you need a loan you need it fast. There is no time to wait when the recession cloud looms. Business failure can feel imminent. There is hope however, and bad credit doesn’t have to get in the way.

Traditional business loans are rarely fast, and if you have bad credit, they usually aren’t even an option. Throw all these issues into a recession period and you may feel like you are sinking fast. There is hope however. There are a ton of options outside of the realm of traditional business loans, and many of them work even if you have bad credit.

Of course, the need for business loans during a recession may not mean you are growing. It could be a desperate last plea to simply make it through the troubled waters alive. Either way, bad credit can weigh you down like an anchor. You have to break free, which is even harder during economic downturns. To be able to cut off the anchor of bad credit however, you need to understand what its made of, and how you got tethered to it in the first place.

Find out why so many companies are using our proven methods to improve their business credit scores, even during a recession.

What is Bad Credit?

Sometimes you don’t even know you are sinking until you need financing and find that you cannot get it due to bad credit. When it comes to regular business loans, bad credit can be a major issue. Typically, a score of over 700 is good credit, but with a score over 650, you can still find financing. If your credit score is below 650, you may have some problems. A recession period can cause you to sink into bad credit before you know it’s happening.

If this is the case, you will need to look for alternative lenders to help you out. They can offer a life preserver so you can make it safely through until the waters calm down.

Personal Credit vs. Business Credit

If you are a new business owner, you may find that it isn’t so much an issue of bad credit, but rather no business credit. This is easily enough remedied over time, but if you need business financing and have bad credit or no credit, it can be a real problem. You don’t have time.

You could try finding financing based on your personal credit. That is, if your personal credit is any good. If it is over 650, you can probably get a credit card that will keep you afloat until you can figure out something better. You may also be able to simply get a personal loan to bail you out, and then work to build business credit going forward.

The problem with this is that it puts even more stress on your personal finances during the recession period. In addition, if your business does end up sinking, you could very well go down with it if your personal credit is tied to it.

How Do You Know Your Credit Score?

When it comes to your personal credit score, it’s easy to know what it is. Not only can you get a free copy of your credit report annually, but there are also a number of companies that will allow you to monitor your credit on a regular basis.

Business credit score monitoring is not as easy. There are no free business credit reports. You can, however, purchase your credit reports from Dun & Bradstreet, Experian, Equifax, and the lesser known business credit reporting agencies for between $50 and $250 each.

Credit Suite can help you monitor your business credit at Dun & Bradstreet and Experian for a fraction of what it costs with them directly. Go here to find out more.

Personal Credit Not an Option?

However, if you are stuck with bad personal credit and bad business credit, you may have to pursue an alternate route. You may not have an obvious flotation device. That means you are going to have to grab onto whatever you can find and hold on tight.

It sounds brutal, but it may be worth it if it saves your business. What are your options? Essentially, the best option is invoice factoring. This only works if you have a significant amount in open invoices. It is the fastest of all the options other than a friend or family member just handing you cash. This would be similar to a large piece of drift wood conveniently floating by.

Invoice Factoring Options

Not only is invoice factoring the fastest way to cash, it is also an option that depends very little on your credit, personal or business. It even works well in a recession period, though maybe not as well as at other times, as the ability to collect could decline somewhat. Sometimes though, there isn’t even a minimum credit requirement for invoice factoring. They may pull a credit score, but they make decisions based more upon the strength of your invoices.

Find out why so many companies are using our proven methods to improve their business credit scores, even during a recession.

The lender will gather information to help them determine the likelihood of the invoices being repaid. If they find that the invoices are strong, they will lend money based on the total amount of the invoices minus a premium. The borrower can usually either repay the loan or the lender can keep the invoices and collect from them.

Fundbox

Fundbox offers invoice financing for amounts less than $100,000. There is no minimum credit score, and there are options for a 12- week or 24-week repayment term. They collect 7% on a 12-week repayment and 15.7% on 24-week terms.

BlueVine

If you have a larger amount in open invoices, like up to $5 million, you can get invoice financing from BlueVine. They charge a weekly fee of .5% to 1%, but the fee drops a little if your clients pay their invoices on time.

Working Capital Loans

If you really need funding fast, invoice factoring is your best bet. If you have a little more time you could seek out working capital loans from alternative lenders. This is also a good option if you do not have open invoices.

Some alternative lenders pull a credit report, but they have a low minimum score requirement. For example, Fundbox offers working capital loans to businesses that have been in operation for at least 3 months and have at least $50,000 in revenue. They lend amounts up to $100,000, and there is no credit check.

Kabbage offers something similar if you have been in business for at least 1 year and have $50,000 in revenue. They will lend up to $250,000. There is no minimum credit score here either, but most approvals have over 500. You also have to have either a business checking account or use an online payment platform.

Find out why so many companies are using our proven methods to improve their business credit scores, even during a recession.

Quarterspot will lend up to $250,000 if you have been in business for at least one year and have at least $200,000 in annual revenue. They will do a soft credit pull, but it does not affect your credit. The minimum score is 550.

Don’t Sink, Hold on Through the Recession Period

Once you find something to keep you from sinking, whatever it may be, hold on tight until you can reach the shore. Be forewarned, if you handle things incorrectly you could end up in much worse trouble that you are already in. You have to use your credit wisely.

If you fail to do this, you may end up floating so far away you never see land again. Make certain you use the financing the way you need to, but that you also pay it back in a consistent and timely manner.

Stay out Troubled Waters

The way you do this is by establishing and building strong business credit. Not only will this keep you out of trouble, but it can make things even better in the long term. You will find that getting what you need to make it through another recession period is a cinch if you follow these tips.

Establish Your Business as Its Own Entity

Your business has to have its own identity, apart from yours, if it is going to have its own credit score. The first step in this process is to incorporate your business. You can choose from a corporation, S-corp, or LLC.

Then list your business in all the directories with its own name and contact information. After that, open a business bank account. Run all your business transactions through this account, so that business finances are separate. Pay bills, make purchases, and apply for credit using this account.

After your business has an identity all its own, it is all up to how well you manage whatever credit you can get. Whatever financing you are able to find, be sure you make your payments on time.

You might also consider looking into vendors that will allow you pay invoices net 30. This starter credit has a lot to offer. Sometimes you will have to prepay for a certain amount of time to get approval. If they give you 30 days to pay an invoice and report to the credit bureaus, this can fast track your credit score. That’s assuming you pay on time of course.

Be Prepared

To be fair, an economic downturn is hard with or without bad credit. Things happen. The key is to be prepared with what you need to get through at all times. Then, you don’t have to worry about trying to scramble to find a business loan you qualify for. You can simply whip out what you already have and climb back on the boat.

What does this look like? Once you have a strong business credit score, you can apply for a business line of credit or a credit card. Find one with the best terms possible, and if it is a credit card, perks and rewards are nice too.

Tools such as these can help you over a rough patch. If you already have them in place, they will not cost you the same way bad credit business loans will. Bad credit can mean higher interest rates, seriously unfavorable terms, and much more. If you already have credit in place, you can simply access that and enjoy the terms and rates your good credit warrants you.

Bad Credit Doesn’t Have to Stop You, Even During a Recession Period

You do not have to sink during a recession, even if you have bad credit. There are options for financing without great credit. Do some research to determine which one is best for you. Once you find it, the real hard part begins.

This is when you have to figure out how to best use the money to move you into a better place. You must be sure to use the debt to build stronger credit. Handle it wisely and do not slip into the cycle of non-payment and further credit score trouble.

If you need the funds to bridge a cash gap, make sure you don’t have a cash leak. Are you relying on financing to handle daily activities that you can’t fund yourself? Figure out how to fix that problem. Are you growing and just need the funds to do so? Great! Don’t forget to pay your bills though. If you do that, you can be out of the water and back on the path to success before you know it.

Don’t stop there though. Once you are back on solid ground, take the time you need to prepare for future funding needs. Build credit, put a recession plan in place, and make sure that the next time there’s a storm, you don’t get knocked overboard.

Note: Lender information can change without notice. Be certain to check with individual lenders for the most up-to-date information.

The post Recession Period Business Loans: Don’t Let Bad Credit Stop You appeared first on Credit Suite.

What Are Inventory Loans and How are They Affected by the Recession

Inventory loans are short term loans that business owners can use to purchase inventory. The inventory is the security for the loan. By taking out this type of loan, a business can stay ahead of demand. It also allows for taking advantage of special pricing, thus increasing profit.

Inventory Loans are Not Always a Sure Thing

Investopedia defines inventory financing as:

“… a revolving line of credit or a short-term loan that is acquired by a company so it can purchase products for sale later. The products serve as the collateral for the loan.”

These types of loans are a type of inventory financing. Seeing as these are, at their core, secured loans, it stands to reason that they are easier to get than unsecured loans. However, that is not always the case.

Why Inventory Loans are Hard to Get

The idea of inventory as collateral for the financing used to buy it sounds simple enough. However, after the hard economic downturn of 2008, lenders are much stingier with this type of small business financing. During that time, it was painfully evident that, if your loan was secured by non-staple items, there was about to be trouble.

Non-necessities do not sell well in a recession. If you can’t sell, the bank cannot either. That means the security is pretty much worthless.

Another issue is that inventory depreciates. As security, it’s basically on the clock. If it depreciates to the point of not being worth the amount of the loan, it is worthless as security. There is also the idea that it may be a fad that is going to quickly go out of style, also not selling.

These are just a few of the reasons lenders are reluctant to approve loans secured by inventory. Typically, they approve these types of loans on a case by case basis, taking all of these factors into account. Even when they grant approval, it is typically for only around 50% of the cost.

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

Ways to Use Inventory Loans

There are some things you can purchase with inventory loans that may surprise you. For example:

If you run a dining establishment, you can use inventory loans to buy flatware and linens in addition to food supplies.
If you run a salon, you can use this type of financing for towels and supplies as well as items to sell.
A clothing store may use the funds for shoes, accessories, and other items.

The point is, funds for these loans can purchase items that are not specifically inventory in terms of things that you sell to the public. They can also purchase supplies for any services you may offer.

Other Options for Inventory Loans

How do you fill in the gap for the other 50% of inventory costs? Further, how can you finance inventory if you cannot get any type of funding at all? There are some other options.

Inventory Loans: Credit Line Hybrid

A credit line hybrid is essentially an unsecured line of credit. It allows you to fund your business without putting up collateral, and you only pay back what you use. The funds can be used for many things, including inventory financing.

It’s super easy to qualify. You need a personal credit score of at least 680, and you can’t have any liens, judgments, bankruptcies or late payments. Furthermore, in the past 6 months you should have less than 4 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards. It’s also preferred that you have established business credit as well as personal credit.

I know, that doesn’t sound all that easy. Here’s the catch. If you do not meet all of the requirements, it’s okay. You can take on a credit partner that meets each of these requirements. Many business owners work with a friend or relative to fund their business. If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding.

Credit Line Hybrid vs. Inventory Loans

There are many benefits to using a credit line hybrid. First, it is unsecured, meaning you do not have to have any collateral to put up. Next, this is no-doc funding. That means you do not have to provide any bank statements or financials.

In addition, typical approval is up to 5x that of the highest credit limit on the personal credit report. Often, you can get interest rates as low as 0% for the first few months, allowing you to put that savings back into your business.

Here is another benefit of the credit line hybrid. With the approval for multiple credit cards, competition is created. This makes it easier, and likely even if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months. The process is generally quick, especially with a qualified expert to walk you through it.

Inventory Loans: Alternative Lending

Alternative lenders generally operate online. They tend to reduce risk by increasing interest rates rather than relying completely on credit information. This means that they can be an option for those businesses and owners that either have bad credit or have not yet built strong enough credit to qualify for financing with traditional lenders. Here are a few options.

Fundbox

Fundbox offers a line of credit rather than a loan, but it is a great funding option because there is no minimum credit score requirement.

They offer an automated process that is super-fast. Repayments are automatic, meaning they draft them electronically, and they occur 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. This means you need to be sure you have enough funds in whatever account you connect them to so that it can cover your payment each week.

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

Upstart

Upstart is an online lender that uses a completely innovative platform for loans. The company itself questions the ability of financial information and FICO on their own to truly determine the risk of lending to a specific borrower. They choose to use a combination of artificial intelligence (AI) and machine learning to gather alternative data instead. They then use this data to help them make credit decisions.

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. Typically, business loans are available up to $50,000. Interest rates vary greatly, ranging from 7.5% to 35.99%. Repayment terms can be either 3 -year or 5-year.

Fora Financial

OnDeck

Bond Street

Offering term loans of up to $1 million, Bond Street terms are for up to 1 to 3 years. They will ask for both EIN and SSN.

Lending Club

Popular online lender Lending Club offers term loans. Business loans go up to $300,000 and terms from 1 to 5 years are available.

Quarter Spot

Quarter Spot is an online lender that offers short term loans up to $150,000. The terms are 9 to 18 months.

Rapid Advance

Rapid Advance offers standard, select, and preferred loans. For standard loans, amounts up to $1 million are available. Their terms are 4 to 12 months.

Kiva

Kiva is an online lender that is a little different. For example, the interest rate is 0%, so even though you have to pay it back it is absolutely free money. They don’t even check your credit. However, there is one catch. You have to get at least 5 family members or friends to invest in your business. In addition, you have to give a $25 loan to another business on the platform. It’s like a crowdfunding, 0% interest loan.

Accion

If your personal credit is okay, Accion may be a good fit for inventory financing. It is a microlender, a nonprofit, that offers installment loans to both startups and already existing businesses. You don’t have to already be in business, but if you are not, you must have less than $500 in past due debt. In addition, your business needs to be home or incubator based.

Credibly

Credibly is also a good option if you are already generating some revenue. They offer short term loans for both business expansion and working capital.

Details related to loan amounts, eligibility requirements, and interest rates change frequently, so it’s best to get that information from the lender’s website directly. However, many of these either do not check credit or will work with a credit score of less than 600. Though interest rates are higher than with traditional lenders, they often offer options where there seem to be none.

Inventory Loans: Credit Cards

In a pinch, you can handle inventory financing with credit cards. If you pay attention, you can get good introductory rates and rewards. However, you have to pay attention so you don’t get stuck with high rates once the introductory rates are over. A better bet is the credit line hybrid, because you can take advantage of all the benefits with an expert to walk you through the process and make sure nothing is missed.

Inventory Loans: Merchant Cash Advance

In some situations, this can be an option for inventory financing. This is how it works. If you take credit card payments, you can get financing based on the average of daily credit cards sales. Then, payment is taken from future sales.

The thing is, if you are in a recession, credit cards sales may not be that great, and future sales may not be solid. However, it is an option that bears mentioning.

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

Inventory Loans: Are They Right for Your Business?

The fact is, every business is likely to need some type of inventory financing in the course of their business. The problem comes when lenders envision large amounts of inventory sitting in a warehouse not selling. If it’s not selling, then the business isn’t making money and the lender is not getting paid.

If you sell staples that are needed in most any type of economy, inventory loans can be a good option. With strong fundability, you may not have any issue getting loans secured by inventory. However, this is not the case with many businesses. A lot of business owners find their fundability is not up to par, and they didn’t even realize it. Couple that with the already unsure nature of getting approved for business loans, and it may be best to go with an alternative.

While alternative loans are a viable option, the first stop for most business owners should be the credit line hybrid. It is available to absolutely anyone. Even if your own credit is not great, the option to take on a credit partner can make this funding source an option for almost anyone.

The best part is, using the credit line hybrid helps to build the fundability of your business. This is because the experts that walk you through the process help ensure that, not only get the funds you need right now, but also that your business is set up and prepared to qualify for any type of funding you may need in the future.

All businesses need inventory funding. If inventory loans won’t work, there are other options.

The post What Are Inventory Loans and How are They Affected by the Recession appeared first on Credit Suite.

The Truth about Unsecured Business Loans in a Recession

The novel coronavirus has upended our economy. We’re already a recession. If you’ve got less than stellar credit, then you may feel you must put up collateral. But that’s not necessarily so. Here’s the truth about unsecured business loans in a recession.

Get the Truth about Unsecured Business Loans in a Recession

Unsecured business loans in a recession can save you. Here’s the skinny on this little-known form of funding.

Bad credit does not have to be a dead weight around your company’s proverbial neck. However, it does make it more challenging to obtain a small business loan. For a brand-new small business in particular, your company credit will be poor as a matter of course.

This is because you just will not have the sort of history and seasoning which can make your commercial credit score rise. And, then, make lending institutions want to lend your business funds).

Hence, lenders are not going to be too thrilled about offering your business a business loan. This is because they genuinely have no clue if your small business will be able to repay the loan. But you are still, with good reason wondering how to fund a small business with poor credit.

Unsecured Business Loans in a Recession: UCC Blanket Liens

As a result of this, lenders will typically obtain a UCC blanket lien in case they do give your company a loan. A UCC blanket lien is a notification which goes on your credit report. It says that the lender has an interest in all of your company’s assets until you repay the loan completely. Thus, there could be unfortunate consequences if you need to default.

Plus, most of these loans will also entail personal guarantees.

But That’s Different! What are Unsecured Business Loans in a Recession? Our Credit Line Hybrid is a Superb Choice!

Check out our credit line hybrid. It’s available for all business owners. Get the benefit of 0% rates cards offer, and the cash out capability of a credit line. Get approvals to $150,000. Pay 0% rates for 6 – 18 months, with normal card rates afterwards. No documentation, no tax returns or bank statements are necessary. This program is ideal for startups, high-risk industries, and those who desire low payments. It also works if you don’t want to supply financials.

Our credit line hybrid is a superb choice during this time of economic uncertainty.

With this form of business financing, you work with a lender who concentrates on securing business credit cards. This is a very unusual, very few know about program which few lending sources offer. They can in most cases get you three to five times the approvals that you can get on your own.

This is because they are familiar with the sources to apply for, the order to apply, and can time their applications so the card issuers won’t decline you for the other card inquiries. Individual approvals frequently range from $2,000 – 50,000.

The end result of their services is that you frequently get up to five cards that simulate the credit limits of your highest limit accounts now. Multiple cards create competition, and this means they will raise your limits, generally within 6 months or less of first approval.

Approvals

Approvals can go up to $150,000 per entity such as a corporation. They actually get you three to five business credit cards that report solely to the business credit reporting agencies. This is huge, something most lenders don’t offer or advertise. Not only will you get cash, but you build your business credit as well so in three to four months, you can then use your new company credit to get even more money.

Details

You get credit with no security, assets, or collateral. Lender has no collateral to collect in case of default. Because there is no collateral, and they don’t look or care about your cash flow, the only thing that matters is your personal credit.

With a 650 you will get just personal cards. But with a 680 credit score, you will get both company and personal cards.

Rates

The lender can also get you low introductory rates, usually 0% for 6-18 months. You’ll then pay normal rates after that, typically 5-21% APR with 20-25% APR for cash advances. And they’ll also get you the best cards for points. So this means you get the best rewards.

Like with anything, there are substantial benefits in working with a source who specializes in this area. The results will be far better than if you try to go at it on your own.

Unsecured Business Loans in a Recession: The Alternative: Building Business Credit

Not enough time in business? Or do you not have enough revenue? Then it’s time to start business credit building.

Every Business Needs Small Business Credit Establishing

Small business credit is credit in a company’s name. It doesn’t connect to an owner’s individual credit, not even if the owner is a sole proprietor and the solitary employee of the business.

Accordingly, an entrepreneur’s business and consumer credit scores can be very different.

The Benefits

Given that business credit is distinct from individual, it helps to safeguard a business owner’s personal assets, in the event of legal action or business insolvency.

Also, with two distinct credit scores, a small business owner can get two separate cards from the same vendor. This effectively doubles buying power.

Another advantage is that even start-ups can do this. Going to a bank for a business loan can be a formula for frustration. But building small business credit, when done correctly, is a plan for success.

Consumer credit scores are dependent on payments but also various other components like credit use percentages.

But for business credit, the scores actually merely hinge on whether a small business pays its debts on a timely basis.

Discover our business credit and finance guide, jam-packed with new ways to finance your business without emptying your wallet. Save your money during the recession!

The Process

Establishing small business credit is a process, and it does not occur without effort. A company will need to actively work to develop business credit.

Nevertheless, it can be done readily and quickly, and it is much more rapid than building consumer credit scores.

Merchants are a big part of this process.

Undertaking the steps out of order will lead to repetitive denials. No one can start at the top with business credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Company Fundability

A company has to be fundable to credit issuers and merchants.

For this reason, a business will need a professional-looking website and email address. And it needs to have website hosting bought from a company like GoDaddy.

And also, business telephone and fax numbers must have a listing on ListYourself.net.

Likewise, the business telephone number should be toll-free (800 exchange or similar).

A company will also need a bank account dedicated strictly to it, and it must have all of the licenses necessary for running.

Licenses

These licenses all must be in the particular, accurate name of the small business. And they need to have the same business address and telephone numbers.

So keep in mind, that this means not just state licenses, but possibly also city licenses.

Dealing with the IRS

Visit the IRS web site and acquire an EIN for the company. They’re free of charge. Choose a business entity such as corporation, LLC, etc.

A company can get started as a sole proprietor. But they will more than likely want to switch to a variety of corporation or an LLC.

This is in order to decrease risk. And it will maximize tax benefits.

A business entity will matter when it comes to taxes and liability in the event of litigation. A sole proprietorship means the business owner is it when it comes to liability and taxes. No one else is responsible.

Sole Proprietors Take Note

If you operate a company as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the small business name. Consequently, you can wind up being personally liable for all small business debts.

In addition, according to the IRS, by having this structure there is a 1 in 7 chance of an IRS audit. There is a 1 in 50 probability for corporations! Steer clear of confusion and significantly decrease the odds of an IRS audit at the same time.

Beginning the Business Credit Reporting Process

Start at the D&B website and get a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s sites for the small business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.

By doing so, Experian and Equifax will have something to report on.

Vendor Credit

First you need to establish trade lines that report. This is also called vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can begin to get retail and cash credit.

These kinds of accounts tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But to start with, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are generally Net 30, rather than revolving.

Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, such as within 30 days on a Net 30 account.

Discover our business credit and finance guide, jam-packed with new ways to finance your business without emptying your wallet. Save your money during the recession!

Details

Net 30 accounts must be paid in full within 30 days. 60 accounts have to be paid fully within 60 days. In contrast to with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of.

To start your business credit profile the proper way, you ought to get approval for vendor accounts that report to the business credit reporting agencies. When that’s done, you can then make use of the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit – It Makes Sense

Not every vendor can help like true starter credit can. These are vendors that will grant an approval with a minimum of effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 3 of these to move onto the next step, which is retail credit.

Accounts That Do Not Report

Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to at the very least one of the CRAs, a trade account which does not report can yet be of some worth.

You can always ask non-reporting accounts for trade references. Additionally credit accounts of any sort will help you to better even out business expenditures, consequently making financial planning less complicated. These are companies like PayPal Credit, T-Mobile, and Best Buy.

Retail Credit

Once there are 3 or more vendor trade accounts reporting to at least one of the CRAs, then move to retail credit. These are service providers which include Office Depot and Staples.

Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the company’s EIN on these credit applications.

Fleet Credit

Are there more accounts reporting? Then move onto fleet credit. These are businesses like BP and Conoco. Use this credit to buy fuel, and to repair and maintain vehicles. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make certain to apply using the business’s EIN.

Discover our business credit and finance guide, jam-packed with new ways to finance your business without emptying your wallet. Save your money during the recession!

Cash Credit

Have you been sensibly handling the credit you’ve up to this point? Then move to more universal cash credit. These are businesses like Visa and MasterCard. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or better. And they also want you to have 10 trade lines reporting on your D&B report.

These are commonly MasterCard credit cards. If you have more trade accounts reporting, then these are doable.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and address any inaccuracies ASAP. Get in the habit of checking credit reports. Dig into the particulars, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs.

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business.

Update Your Record

Update the info if there are errors or the info is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. And for Equifax, go here: www.equifax.com/business/small-business.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any problems in your records. Mistakes in your credit report(s) can be corrected. But the CRAs usually want you to dispute in a particular way.

Get your company’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report inaccuracies normally means you send a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always send copies and keep the originals.

Fixing credit report errors also means you precisely spell out any charges you contest. Make your dispute letter as clear as possible. Be specific about the problems with your report. Use certified mail so that you will have proof that you sent in your dispute.

Dispute your or your business’s Equifax report by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute inaccuracies on your or your business’s Experian report by following the instructions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B’s PAYDEX Customer Service contact number is here: www.dandb.com/glossary/paydex.

A Word about Building Business Credit

Always use credit responsibly! Don’t borrow beyond what you can pay off. Track balances and deadlines for repayments. Paying off in a timely manner and in full will do more to elevate business credit scores than pretty much anything else.

Growing small business credit pays off. Great business credit scores help a business get loans. Your loan provider knows the company can pay its financial obligations. They know the business is for real.

The small business’s EIN links to high scores and credit issuers won’t feel the need to request a personal guarantee.

Business credit is an asset which can help your company for many years to come. Learn more here and get started toward growing business credit.

Unsecured Business Loans in a Recession: Takeaways

For each of these alternatives, you will definitely have a preferable rate of interest if your credit score is better than poor. And you will most likely have more options, so you can shop around and compare plans.

If your business can stand by until your credit– either company or personal or both– improves, then your alternatives will significantly improve, too. In the meantime, unsecured business loans in a recession can help. Use this pause in our lives to improve your credit. Because the COVID-19 situation will not last forever.

The post The Truth about Unsecured Business Loans in a Recession appeared first on Credit Suite.

How to Get Business Loans with Bad Credit

You may think it is impossible to get business loans with bad credit. In truth, it is just impossible to do so from traditional banks without some sort of guarantee. There are other options however.

Is It Possible to Get Business Loans with Bad Credit?

For example, the government guarantees loans from traditional banks through The Small Business Administration, or SBA. This government guarantee makes it easier to get loans with lower credit scores than would normally be acceptable.

Business Loans with Bad Credit: SBA Loans

The key is, how bad is “bad” credit. Generally speaking, you can qualify for a loan most anywhere with a credit score over 730. However, your interest rates may leave a lot to be desired. If your credit score is less than that, but above 650, you may qualify for one of these SBA loans programs.

7(a) Loans

This most popular SBA loan program offers federally funded term loans up to $5 million. In addition, the funds can be used for expansion, purchasing equipment, working capital and more. Banks, credit unions, and other specialized institutions process these loans and disburse the funds. What does that mean? It means that you apply with a traditional lender, but it isn’t exactly a traditional loan.

The minimum credit score to qualify is 680. Also, there is a required down payment of at least 10% for the purchase of a business, commercial real estate, or equipment. Lastly, the minimum time in business is 2 years. In the case of startups, business experience equivalent to two years will work.

Funds are available for a wide variety of projects, from working capital to refinancing debt. You can even buy a new business or real estate.

504 Loans

These loans are available up to $5 million. You can use the funds to buy machinery, facilities, or land. Typically, these are expansion loans. They especially work well for commercial real estate purchases.

Terms for 504 Loans range from 10 to 20 years. Unfortunately, funding is slow. It can take from 30 to 90 days. They require a minimum credit score of 680, and they use the asset the loan is financing as collateral. Furthermore, there is a down payment requirement of 10%. This can increase to 15% for a new business.

Like 7 (a) loans, you must be in business for at least 2 years, or management must have equivalent experience if the business is a startup.

Microloans

Microloans go up to $50,000. They work well for starting a business, purchasing equipment, buying inventory, or as working capital. Community based non-profits administer microloan programs as intermediaries. Unlike most other SBA loans, financing comes directly from the Small Business Administration.

They can take upwards of 90 days to fund. The minimum credit score for microloans is 640, and collateral and down payment requirements vary by lender.

SBA Disaster Loans

As a general rule, disaster loans go up to $2 million. However, there are tons of changes in the program right now due to the need for COVID-19 relief. These loans are also processed directly through the SBA rather than through partner lenders. They are for small-business owners that have been affected by natural disasters, and the COVID-19 pandemic has been deemed to qualify as a natural disaster. Terms go up to 30 years. The maximum interest rate is 4%, and you can apply for disaster loans directly at SBA.gov.

The minimum credit score for these loans is 660. Additionally, collateral is necessary if the loan goes over a certain amount. That amount is usually $25,000. For a military economic injury disaster, the amount that requires collateral is $50,000. Either way, a down payment is not necessary.

SBA Express Loans

The max amount for these loans is $350,000. Terms range from 5 to 25 years. To qualify, your credit score must be above 680. Also, you must have a debt to service ratio of 1.1 or higher. If the loan is greater than $25,000, collateral may be necessary depending on the lender.

As the name suggests, you get funds from express loans much faster. In fact, the SBA takes 36 hours or less to give a decision. Not only that, but the necessary paperwork for application is less also. This makes express loans a great option for working capital, among other things, if you qualify.

SBA CAPLine

There are 4 distinct CAPLine programs that differ mostly in the expenses they can fund. Each of them carries a maximum amount of $5 million. In addition, the interest rate for each range from 7% to 10%. Like many of the others, funding can take 45 to 90 days.

The four different programs are:

Seasonal CAPLines

Contract CAPLines

Builder’s CAPLines

Working Capital CAPLines

For these, the minimum credit score to qualify is 680. However, there is no minimum time in business requirement unless you are getting a seasonal CAPLine. That one carries a one year in business requirement.

Get our business credit building checklist and build business credit the fast and easy way to beat the recession blues.

Business Loans with Bad Credit: Alternative Loans

These are loans from private lenders rather than traditional banks. Most of them operate online exclusively. We’ve listed a few for you below. Be sure to double check details like required credit score and interest rate, as these things can change without notice.

Fundbox

Fundbox is going to be one of the first lenders to pop up if you search for alternative business loans. It is a line of credit rather than a loan, but it is a great funding option because there is no minimum credit score requirement.

Loan amounts come as low as $100 and as high as up to $100,000, but the max initial draw is $50,000. Though there is no minimum credit score requirement, they do require at least 3 months in business, $50,000 or more in annual revenue, and a business checking account with a minimum balance of $500.

BlueVine

The minimum loan amount available from BlueVine is $5,000 and the maximum is $100,000. Annual revenue must be $120,000 or more and the borrower must be in business for at least 6 months. Your personal credit score has to be 600 or above. It is important to note also, that BlueVine does not offer a line of credit in all states.

Upstart

Upstart uses a completely innovative platform for alternative loans. The company questions the ability of financial information and FICO alone to truly determine the risk of lending to a specific borrower. Instead, they choose to use a combination of artificial intelligence and machine learning to collect alternative data. They then use that data to help them make credit decisions.

Alternative data can include 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. Typically, business loans are available ranging from $1,000 to $50,000. Interest rates vary greatly, ranging from 7.5% to 35.99%. You can pay back loans over either 3-years or 5-years.

To be eligible for a loan with Upstart, you must meet the following qualifications:

Credit score of 620+
No bankruptcies or negative public records
No delinquent accounts
Meet debt to income standards (they only note they will check this ratio, not what their standards are.)
Have fewer than 6 inquiries in the past 6 months on your credit report, not including those related to student loans, vehicle loans, or mortgages

These are the requirements they list on their website. One independent review said that the requirement for the debt to income ratio is a maximum of 45%. It also says that the minimum annual income has to be at least $12,000.

Fora Financial

Fora Financial funds more than $1.3 million in working capital around the United States. There is an early repayment discount if you qualify.

This is a great option for business loans with bad credit. Why? Here is what Fora Financial says about credit score:

“At Fora Financial we do not believe that the number of your credit score defines who you are as a business owner. We look at your entire business model along with your future plans to create a financing program that will help you reach your goals.”

As you can see, there really isn’t a minimum credit score requirement.

Loan amounts range from $5,000 to $500,000. The business must be at least 6 months in operation and the monthly revenue has to be $12,000 or more. There can be no open bankruptcies.

OnDeck

They do require a personal credit score of 600 or more for at least one owner. Also, you must be in business for at least 3 years. Annual revenue must be at or exceed $100,000. In addition, there can be no bankruptcy on file in the past 2 years and no unresolved liens or judgements.

Kiva

Kiva is an online lender that is a little different. For example, the interest rate is 0%, so even though you have to pay it back it is absolutely free money. They don’t even check your credit. However, there is one catch. You have to get at least 5 family members or friends to throw some money in the pot as well. In addition, you have to pitch in a $25 loan to another business on the platform.

Accion

Accion is a microlender, a nonprofit, that offers installment loans to both startups and already existing businesses. You don’t have to already be in business, but if you are not, you must have less than $500 in past due debt. In addition, your business needs to be home or incubator based.

Loans are from 6 to 60 months and interest rates range from 7% to 34%. A personal guarantee, and sometimes specific collateral, is necessary in most circumstances.

What’s the minimum credit score? Accion says it best in their FAQ’s:

“Credit is just one of many factors that we look at when we work with business owners. If your credit isn’t well established or damaged, we can work to find strengths in your business or finances to make the loan possible. We do have firm requirements on past due debt and bankruptcies and have credit score minimums in some areas, so please check our loan requirements to see if we are a good fit for you.”

Basically, depending on your other information, Accion can be a good option for business loans with bad credit.

Get our business credit building checklist and build business credit the fast and easy way to beat the recession blues.

Build and Improve Business Credit and Forget About Business Loans with Bad Credit

Maybe one of these options will work for you. But what if you didn’t have to worry about finding business loans for bad credit? What if you could have good business credit? Guess what? You absolutely can! How? Well, first, you have to set up your business to be an entity separate from yourself. That way, when you take out debt in your business name and repay it, the accounts will report to your business credit report and not your personal credit report.

There is a lot to building fundability and business credit, but here is a starting point.

Make sure you and your business do not share contact information. Your business needs a separate phone number and address.
Get your business an EIN so you can apply for business credit without your SSN.
Incorporate your business as an LLC, S-corp, or corporation.
Make sure your business has all the licenses it needs to operate legally.
Open a separate, dedicated business bank account.

After your business is set up properly, you can work with starter vendors to build business credit. These are companies that sell things you use in the course of everyday business, like office supplies, cleaning supplies, even packaging materials. They will issue net invoices without doing a credit check, so you don’t have to have credit to get credit with them. Then, they will report your payments to the business credit reporting agencies. That gets the ball rolling.

It is Possible to Get Business Loans with Bad Credit

It is absolutely possible to get business loans with bad credit. However, once you get the funding you need, don’t stay in a bad credit hole. Get to work building a ladder to get yourself out. Get the funds you need to stay open, but at the same time, work to put yourself in a better position for the future.

Get our business credit building checklist and build business credit the fast and easy way to beat the recession blues.

The post How to Get Business Loans with Bad Credit appeared first on Credit Suite.

On the Hunt: Finding Elusive Recession Startup Business Loans

COVID-19 threw our country into a recession that no one really saw coming. The drastic turn in the economy was jarring to say the least. Starting a business now can be scary. Here’s what you need to know about recession startup business loans and other funding options.

How to Find Other Funding Options Besides Recession Startup Loans

Small businesses continue to report problems finding credit. About 45% do not apply, most likely due to the fact that they do not need to. Another 20% don’t apply because they are discouraged from doing so. They either feel they will not qualify or they believe the process is too hard, and therefore not worth the time.

Small business owners report that competition among banks for their business came to a head from 2001 to 2006, and that this competition has declined from 2006 to the present.

But Wait, There’s More to Recession Startup Business Loans and the Economy

Even more concerning, according to one report, the number of American banks and thrifts has been decreasing slowly for 25 years. This is coming from consolidation in the marketplace in addition to deregulation in the 1990s, reducing barriers to interstate banking. What does that mean in layman’s terms? In short, recession is coming. Will you be able to find funding?

Assets focused in ever‐larger financial institutions is a problem for small business owners. Big banks are a lot less likely to make small loans. Economic declines usually mean financial institutions will become more mindful with financing.

The good thing for small businesses is, business credit does not rely on traditional financial institutions. What about recession startup business loans? How do you find them? Does such a thing even exist?

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

In the strictest sense, yes. I mean, startup business loans do not just disappear during a recession. They are just harder to get. Startups are a big risk, and few lenders are willing to take such risks, especially during a recession.

That doesn’t mean you should lose all hope however. There are options that can make it easier for you to qualify, and if you are still not able to get startup business loans, other types of funding do exist.

The Credit Game?

Lenders check credit to help determine whether or not a borrower is likely to repay the loan. It is an effort to reduce risk. If you have great personal credit, you are home free. No need to hunt, the loans will come to you whether there is a recession or not.

While credit is a good indicator of likelihood to repay, it is far from perfect. The problem is, for business loans, most owners have to rely exclusively on their personal credit. This is because, as a startup, they likely do not have any business credit yet. It is possible to have not so great personal credit and still be able to meet business obligations.

What Else Can Lenders Use besides Credit to Approve Recession Startup Business Loans?

There are a ton of potential borrowers out there that could be great for lenders. Unfortunately, they will never get a second look because of a poor personal credit score or non-existent business credit score.

Some lenders are willing to take other factors into consideration when they determine whether to approve business loans. They may look at credit, but they look at income, current debt, and length of time in business as well.

Often a business can get approval based on length of time in business and annual revenue. It is important to remember that startups can be as young as a couple of years. It does not have to be a brand-new business to qualify as a startup.

Most loans that do not require a great credit score do require at least 6 months in business. Some will go with 3 months. Few and far between are the loans that do not have a minimum time in business requirement.

Some lenders will get as personal as to ask why your personal credit score is low. If there is a personal situation that caused a decline in credit, telling them about it may help. In addition, if your score is low but has increased significantly, you should bring that to their attention as well.

For example, if you can show them that your score went low as a result of a health problem, but has increased 100 points since that problem was resolved, it can only help.

What Exactly Are You Hunting For?

Loans are hard to come by in a recession, period. Recession startup business loans may be some of the hardest to find. The key is to remember you are hunting more for the right lender, rather than the right loans. Not only that, but you may be better off looking for another type of funding all together. Here are some surprising alternatives to traditional lenders and loans.

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Alternative Lenders

Alternative lenders are likely the best option when it comes to business loans in a recession. They are alternatives to the standard banks and credit unions. Many operate solely online. They often process applications in just a few days, and borrowers receive funds quickly.

The main difference in alternative and traditional lenders is that there are many occasions where they may not even do a credit check. Often, if you can show that you are generating sufficient revenue to repay the loan and interest, you are golden.

You do have to do your research still. Do not assume every loan an alternative lender offers is what you are looking for.

The interest rates with alternative lenders are generally higher, and the repayment terms are less liberal. They may also require a personal guarantee or collateral of some sort.

Despite the often less favorable interest rates and terms, these are a great option for those looking for recession startup business loans.

Crowdfunding as an Alternative to Recession Startup Business Loans

Crowdfunding is not technically a loan, though some crowdfunding sites offer a lending option. These are more in line with investments. This means you do not have to pay them back.

It won’t work for everyone. You have to set a goal for the amount of investment you want. With some sites, if you do not reach that amount, you do not get your funds. Other crowdfunding sites are more flexible, allowing you to take whatever you can get.

The main reason this doesn’t technically fall into the category of business loans is that the main product is not a loan. You do have to provide in depth information however, and most sites require you to offer backers an incentive for their investment. It is only fair to mention, also, that it may be harder to find those willing to participate in crowdfunding during a recession.

Angel Investors

Again, this isn’t a loan, but it is an option if finding recession startup business loans is proving difficult. The idea is very similar to that of crowdfunding, except you replace the crowd with one investor. Sometimes it is two or three investors. It is a few, and not a crowd, that provide the bulk of the funding.

It’s important to note that angel investing in your endeavor can be really informal. Even your mother can be an angel investor.

Invoice Factoring

If you have been in business long enough to have open invoices, invoice factoring could be an option. The lender is not concerned with your credit, because they will not be collecting from you.

They will pay you a discounted value for your open invoices and then attempt to collect the full amount from your customers. This is an excellent funding option, but it does not operate exactly the same as traditional loans.

Credit Line Hybrid

A credit line hybrid is the funding option many do not know about, and it is perfectly suited for business funding during an economic downturn. It allows you to fund your business without putting up collateral, and you only pay back what you use.

How hard is it to qualify? Not as hard as you may think. You do need good personal credit. That is, your personal credit score should be at least 685. In addition, you can’t have any liens, judgments, bankruptcies or late payments. Furthermore, in the past 6 months you should have less than 5 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards. It’s also preferred that you have established business credit as well as personal credit.

If you do not meet all of the requirements, it’s okay. You can take on a credit partner that meets each of these requirements. Many business owners work with a friend or relative to fund their business. If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding.

What are the Benefits of a Credit Line Hybrid?

There are many benefits to using a credit line hybrid. First, it is unsecured, meaning you do not have to have any collateral to put up. Next, the funding is “no-doc.” This means you do not have to provide any bank statements or financials.

The process is pretty fast, especially with a qualified expert to walk you through it. One other benefit is this. With the approval for multiple credit cards, competition is created. This makes it easier, and likely even if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months.

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Self-Funding with Friends and Family During a Recession

Your friends and family are often your best source of recession startup business loans. If they believe in your cause and have the funds, they may be willing. They may also be more flexible and generous in terms of interest rates and repayment terms. It never hurts to ask.

If you have savings or retirement funds available, there is no doubt you will have guaranteed approval with what’s called securities-based financing. An added bonus is that you can repay yourself, and if you choose to do so with interest, even a little, you could end up better off. If you need to take it more slowly, you can do that too. You can be as flexible as you want with yourself.

Avoid the Hunt for Recession Startup Business Loans

If you are weary of the hunt, start now working to establish and build business credit. Many times, this is an issue for the simple reason that business owners do not understand business credit and personal credit are not the same thing.

By working to establish a credit score for your business separate from your own, you make it easier to fund your business endeavors in the future.

First Things First

If you do not currently have business credit and need to get it established, there are some simple steps you can take to get started.

Incorporate your business as a corporation, S-corp, or LLC.

Get your business its own phone number and address separate from your own.

List this information under your business name in all the directories.

These steps establish your business as its own entity separate from you and your finances. This is the essential first step to establishing business credit.

Build Strong Business Credit

This should be the ultimate goal. Once your business is its own entity, you can work on building, or repairing, bad credit. When that part is complete, you no longer have to worry about finding funding based on your personal credit alone. You will just be able to apply for a loan and negotiate for the best terms and rates.

How do you get there? First, make sure you are doing business with vendors that report to the credit agencies. Then, get whatever credit you are eligible for.

Even if you don’t need credit at the moment, get something. Make your payments on time, consistently. This builds a credit score where there was none before, and it can begin to repair a poor credit score.

A Successful Hunt Many Not Even Include Recession Startup Business Loans

There is always an obstacle to overcome. There is always a problem of some sort. Don’t let the finding recession startup business loans be the thing that keeps you from starting and running a successful business.

You may be able to find a loan, but if you can’t, there is more than one way to bag the prize. The alternatives to business loans for startup funding are numerous. If the regular weapons are not available for whatever reason, find another way. Take a look at alternative lenders, invoice factoring, merchant cash advance options, Crowdfunding, Angel Investors, or even friends and family.

Recessions come and go. It is the nature of the economy. No matter what, it just happens. It can be counted on the same way as the sunrise and sunset. Thankfully, it doesn’t have to bring success or progress to a halt. Explore your options and be diligent to find the funding you need for your business. You have to get creative and seek out alternative methods, and that is okay. Having a strong business credit score can definitely help also. Find out more about that here.

Just don’t give up. Remember, the key is to put yourself in a better situation so that once you survive the battle, you can win the war.

The post On the Hunt: Finding Elusive Recession Startup Business Loans appeared first on Credit Suite.

Best Small Business Loans

Disclosure: This content is reader-supported, which means if you click on some of our links that we may earn a commission.

Unless you’re independently wealthy, most small business owners need a loan at one point or another. From paying for startup costs to expansion projects, equipment, or unexpected incidents, quick access to funding will make it easier for your company to grow.

Whether you’re launching a brand new venture or own an established business, there are so many different small business lending options out there to consider.

Which small business loan is best for you? This guide contains everything you need to know on the subject.

The Top 6 Options For Small Business Loans

How to Choose the Best Small Business Loans For You

Small business loans come in all different shapes and sizes. So as you’re evaluating different options, there are specific considerations that must be examined. I’ll explain each one in greater detail below.

Lender

When most people think about getting a loan, they automatically assume that a bank is their only option. But in addition to small local banks and national bank chains, there are lots of other lenders that can provide your small business with capital.

You can explore credit unions, crowdfunding sites, P2P lenders, loan marketplaces, nonprofit lenders, and even alternative lending solutions.

The qualification requirements and loan terms will vary from lender to lender.

Loan Type

Most lenders offer multiple types of loans for small business owners. Some common small business loan types include SBA loans, lines of credit, installment loans, short term loans, equipment loans, commercial real estate loans, and merchant cash advances.

In some cases, you’ll need to provide the lender with more information about what you’ll be doing with the funds. For example, an equipment loan couldn’t be used to purchase inventory, and a commercial real estate loan couldn’t be used to buy a new vehicle.

Lines of credit are great options to have since they can be used for lots of different purposes. We’ll talk more about these different loan types in greater detail shortly.

Capital Required

The loan amount you’re seeking also needs to be taken into consideration. There’s a big difference between $5,000, $50,000, and $5 million.

Certain lenders are better for microloans and small amounts, while others are known for lending large sums of cash.

Take a look at the minimum and maximum amounts available before you apply for a loan. Generally speaking, you shouldn’t apply for more than you need (unless it’s a line of credit). Otherwise, you’ll have higher interest payments.

Minimum Qualifications

In most cases, you won’t qualify for every type of loan. So pay close attention to these terms before you apply, or you’ll just be wasting your time (and potentially hurt your credit).

Some lenders will only loan money to companies that have been in business for a certain number of years. There are also some cash flow requirements, annual revenue requirements, and business owner credit score requirements for certain loans.

Loan Terms

The loan terms are crucial when you’re evaluating different options. How soon will you need to pay the money back? What interest rates will you be paying?

Make sure you look beyond the dollar amount and take a deeper look at the terms.

Businesses with bad credit won’t have access to the lowest interest rates and loan terms. So you’ll definitely want to shop around until you’re comfortable with the options presented to you.

The Different Types of Small Business Loans

There are tons of different small business loans out there. But I want to quickly highlight the most popular options to give you a better understanding of how they work.

SBA Loan

SBA loans are backed by the Small Business Administration. This federal agency helps businesses gain access to better funding resources.

These loan amounts typically range from $50,000 to $5 million with terms from 10-25 years.

SBA loans usually have great rates (since the SBA reduces the lender’s risk), but they can be tough to qualify for. The process to apply and get approved for an SBA loan can be slow.

Business Line of Credit

Lines of credit are great for those of you who need flexibility. Instead of receiving a lump sum of cash, you can borrow up to your credit amount as needed.

Business lines of credit can range anywhere from $1,000 up to $500,000.

It’s usually easy to qualify for a line of credit if you’ve been in business for more than a year and have $50,000+ in annual revenue. Interest rates vary based on the lender, your credit score, and other qualification terms. But you’ll only pay interest on the amount you borrow on the revolving line.

Term Loan

Term loans are funded quickly. In some instances, you can receive cash within 24 hours of getting approved. It’s common for term loans to be used for working capital, equipment, operations, and more.

Some of these loans are short term and must be paid back as early as 12-24 weeks. Others have repayment terms in the 1-5 year range.

Term loans typically have fixed interest rates or flat fees, so your payments won’t increase throughout the lifetime of the loan.

Merchant Cash Advance

With a merchant cash advance program, small businesses can borrow against future earrings to secure capital. These loans are repaid with a daily percentage of your credit card sales, as previously agreed upon with the lender.

Most merchant cash advances can be used for a wide range of needs. Similar to a term loan, you can usually get access to funds quickly as well.

It’s easy to get approved for a merchant cash advance, but the interest rates are usually high.

Equipment Financing

The name is pretty self-explanatory here—the money from equipment financing must be used to purchase equipment. But it’s worth noting that the term “equipment” is pretty broad.

In addition to things like conveyor belts, forklifts, and machinery, other types of equipment like accounting software, or payment processing systems would also fall into this category.

Equipment financing is usually secured by the equipment you’re purchasing. If you fail to repay the loan, the lender can seize the equipment.

Business Credit Card

Credit cards and loans are obviously not the same. But a business credit card can potentially be a great option to finance certain purchases.

Some cards offer businesses introductory promotions like 0% APR financing within the first year of opening an account. So you can potentially buy something at 0% interest by putting it on your new credit card (assuming it’s less than your credit amount). But beyond the introductory offer, credit cards will have significantly higher interest rates than other types of loans.

You can read my reviews of the best business credit cards here.

Secured Loans

A secured loan requires some type of collateral in order for you to qualify. This is common for high-risk businesses. If the business defaults on the loan, the lender will seize the collateral.

Since secured loans don’t pose as much of a risk to lenders, the interest rates are usually low.

Unsecured Loans

An unsecured loan is the exact opposite of a secured loan. Businesses can borrow money without having to put up any collateral.

In order to qualify for an unsecured loan, your business usually needs to have a long track record of profitability and success without any liens or outstanding debts. If the lender thinks you’re a high risk to default on the loan, they might require you to secure the loan with collateral.

Crowdfunding Loans and P2P Loans

These types of loans are sourced from a pool of investors. You can get these loans from crowdfunding websites with small amounts collected from the general public or get them from alternative lending platforms where individuals offer P2P loans as a source of income.

If you can’t qualify for a traditional loan, you might consider a crowdfunding or P2P borrowing option.

#1 – Fundbox Review — Best For Short-Term Loans

Fundbox is used by 100,000+ businesses across a wide range of industries.

Technically, they offer business lines of credit. But the repayment period on the amount you borrow gets paid back over a 12 or 24-week plan, which falls into the short-term loan category.

Using Fundbox is simple, and you’ll get fast access to cash whenever you need it. To apply, you just need to connect your bank account and accounting software, so Fundbox can view your financials.

You’ll only pay for funds that you draw from your line of credit, so you can use Fundbox multiple times for various short-term loans. There’s no penalty for early repayments.

Before you withdraw funds, Fundbox gives you a transparent calculation of the principal, interest amount, and weekly payments due. So you can plan accordingly and know exactly how much you owe each week for the duration of the loan.

Fundbox is perfect for short-term situations when you need a little extra cash. It’s commonly used for late invoices payments, unplanned expenses, and to float small businesses during periods of slow sales.

Apply online, and get a decision within minutes. Funds can be transferred to your account as soon as the next business day.

#2 – Funding Circle Review — Most Versatile Loan Options

Funding Circle is an industry leader in the small business lending category. It’s a popular choice for businesses that want fast and affordable loan options.

With a single application, Funding Circle will provide you with multiple loan types and options to choose from.

Loan types and funding solutions provided by this lender include:

SBA loans
Business term loans
Merchant cash advances
Business lines of credit
Invoice factoring
Working capital loans

You can get a decision in less than 24 hours and gain access to funds within three days of getting approved. Funding Circle has term loans from $25,000 to $500,000 and SBA loans from $20,000 to $5 million.

I also like Funding Circle because the platform makes it easy for you to manage your loan online. Apply on their website by filling out an application—it takes just six minutes to complete.

#3 – Accion Review — Best For Startups

Accion is a nonprofit organization dedicated to helping small business owners and entrepreneurs fund their startups.

In fact, Accion is the largest nonprofit lending network in the US.

Accion offers term loans of up to $250,000 at an affordable rate. You can apply online or over the phone to get a tailored solution that fits your unique needs.

Here are some of the business types that Accion commonly lends money to:

Women owned businesses
Minority owned businesses
Food and beverage businesses
Small businesses
Startups
Veteran owned businesses
Business owners with disabilities
Green businesses

Accion also has a wide range of small business resources available to help you achieve success in your industry. With 25+ years of experience in the small business lending space, I strongly recommend Accion to startups and other businesses in the categories listed above.

#4 – Lendio Review — Best Small Business Loan Marketplace

Lendio isn’t a small business lender. But it’s one of the most popular online marketplaces for business loans.

If you want to compare loan options from 75+ lenders with a single platform, look no further than Lendio.

This marketplace has facilitated $10+ billion in funding to 216,000+ small businesses. There is a wide range of loan types available through Lendio’s network of lenders, including:

Startup loans
Term loans
Commercial mortgages
Short term loans
SBA loans
Merchant cash advances
Business lines of credit
Business credit cards
Equipment financing
Accounts receivable financing
Business acquisition loans

I also like Lendio because they provide additional resources for small business owners, like financing calculators and bookkeeping guidance.

Just fill out some quick information about your business online to get loan offers from lenders in the Lendio network.

#5 – OnDeck Review — The Best For Revolving Credit

OnDeck has delivered $13+ billion to businesses across the globe. They offer term loans of up to $250,000 and business lines of credit up to $100,000.

I like OnDeck because it’s so simple. After you complete an application online or over the phone, a dedicated loan advisor will go over your options with you. OnDeck offers funding as early as the same business day.

Your line of credit from OnDeck is a great option for working capital. Only withdraw what you need, when you need it, and just pay interest for the amount borrowed.

Repay your line of credit over a 12-month term agreement with automatic weekly payments and no prepayment penalties.

To qualify, you must be in business for at least a year with a minimum personal FICO score of 600 and an annual revenue of $100,000+.

OnDeck periodically reviews your credit profile. So you can automatically qualify for higher credit line limits without having to apply for an increase. You’ll also benefit from a consolidated weekly payment on all withdrawals, so you won’t have to worry about making multiple payments.

#6 – Kiva Review — Best 0% Interest Small Business Loans

If you need a microloan and you’re not in a rush to get it, Kiva will let you borrow up to $15,000 at 0% interest—no strings attached.

As a global nonprofit, Kiva has helped 2.5+ million entrepreneurs raise $1+ billion.

The only downside of Kiva is that it takes quite a bit of time to actually get the loan. So it’s not ideal for businesses that need cash fast.

First, you need to fill out an online application that can take up to 30 minutes to complete. Then you need to prove your creditworthiness by convincing your friends and family to loan you money, which is about a 15-day process. Finally, you can go public on Kiva and make your loan visible to 1.6+ million lenders across the world (an additional 30 days).

On the positive side, you’ll have up to 36 months to repay your loan at 0% interest. It’s tough to beat that deal.

But if you’re looking for large sums of cash as fast as possible, this won’t be the best choice for your business.

Summary

If your small business needs money, there are lots of different small business loan options for you to consider.

Which one is the best?

The answer depends on a wide range of factors, like the amount you need, the loan type, lender, and more. Regardless of your situation, you can find the best loan options for your business based on my recommendations in this guide.

The post Best Small Business Loans appeared first on Neil Patel.

How Being Fundable Helps You Get the Best Business Loans

Everyone wants the best of the best, and it should be no different when it comes to business loans. However, you may need to change your thinking about what actually makes the best business loans the best. Build Fundability So You Can Get the Best Business Loans For example, do great terms make a loan … Continue reading How Being Fundable Helps You Get the Best Business Loans

How Being Fundable Helps You Get the Best Business Loans

Build Fundability So You Can Get the Best Business Loans

For example, do great terms make a loan one of the best? Could it be low rates? These things are awesome. However, the best business loans are the loans you can get. Of course, you can look at the cream of the crop. Still, if you cannot access them, they will not do you any good. You need to know what the best business loans are that you can access. Furthermore, you need to know how to gain access to those that are even better.

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

What Makes a Loan One of the Best?

Fortunately, U.S. News helps us out by outlining the best business loans in various categories. When compiling their list, they consider such factors as product availability, terms, and service ratings.

Best Business Loans for Borrowers with FICO Credit Scores as Low As 530

BlueVine takes the prize in this category. The minimum loan amount available from them is $5,000 and the maximum is $100,000. Annual revenue must be $120,000 or more and the borrower must be in business for at least 6 months. Personal credit score has to be at least 600. It is also important to know that BlueVine does not offer a line of credit in all states.

They report to Experian. They are one of the few invoice factoring companies that will report to any business credit bureau. This helps build business credit and in turn, fundability.

Best Business Loans for Up to Five Year Loan Terms

The winner in this category is Funding Circle. Honestly, if you’re looking for a low APR, then this is your go-to. They have fixed rate term loans and require a credit score of 620 or above. There is no minimum revenue requirement, but they do require you to be in business for at least 2 years.

Best Business Loans With No Collateral Required

OnDeck offers lines of credit and term loans with fixed interest rates. You can get up to $500,000 with a term loan. The minimum FICO they require is 600. In addition, you must have $100,000 minimum annual revenue and be in business for at least one year.

Best Small Business Loans for Up to $1 Million

With a large selection of financing products that includes term loans, Rapid Finance can be a great option for larger amounts. In addition to term loans, they offer bridge loans, healthcare cash advances, and lines of credit. Terms are from three to six months. Amounts range from $5,000 to $1,000,000. Unfortunately, they do not make their minimum credit score readily available on their website. However, you can use their quote tool to get an idea of what you qualify for.

Best Business Loans for Borrowers In Business for 6 Months or More

StreetShares offers invoice financing, term loans, and lines of credit. The number of years in business requirement is one. They require less minimum annual revenue than the others at only $25,000. The minimum credit score is 600.

The key with each of these loans is, your ability to get them is dependent on the fundability of your business.

What is Fundability?

Fundability is, in short, the ability to get funding. It is the complete picture of your business and personal financing and your ability to repay debt. If you think of fundability as a puzzle, there are hundreds of pieces that come together to complete it. The problem is, a lot of business owners cannot see the complete picture because they are unaware of what additional pieces may be floating around out there.

Also, unlike a puzzle, the pieces are not all the same size. Some are very large, while others are smaller. If your large pieces are in great shape, the smaller ones may not matter so much. If, however, your large pieces, like credit history, are not so great, the smaller pieces can make a much bigger difference in your ability to get the best business loans.

What Makes Up Fundability?

What are these puzzle pieces and how can you make sure they are in the best possible shape? Hold on to your hats. Some of these may surprise you.

Contact Information

That’s right. Even something as small as your contact information can affect the fundability of your business. Your business needs to have its own phone number, fax number, and address.

EIN

An EIN is an identifying number for your business that works in a way similar to how your SSN works for you personally. You can get one for free from the IRS.

Incorporation

Incorporating your business as an LLC, S-corp, or corporation is necessary to fundability. It lends credence to your business as one that is legitimate. It also offers some protection from liability.

Business Bank Account

You have to open a separate, dedicated business bank account. There are a few reasons for this. First, it will help you keep track of business finances. Also, it will help you keep them separate from personal finances for tax purposes.

Additionally, there are several types of funding you cannot get without a business bank account. Many lenders and credit cards want to see one with a minimum average balance. Also, you cannot get a merchant account without a business account at a bank. As a result, you cannot take credit card payments. Studies show consumers tend to spend more when they can pay by credit card.

Licenses

For a business to be legitimate and fundable it has to have all of the necessary licenses it needs to run. If it doesn’t, warning signals are going to go off all over the place. Do the research you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels.

Website

Your business website, or lack thereof, can affect your ability to get funding. In fact, these days, if you don’t have an online presence you may as well not even exist. Still, a poorly put together website can be even worse. Truly, it is the first impression you make on most. If it appears to be unprofessional, it will not look good to consumers or potential lenders.

Spend the time and money necessary to ensure your website is professionally designed and works well. Pay for hosting too. Don’t use a free hosting service. Similarly, your business needs a dedicated business email address. Make sure it has the same URL as your Website. Don’t use a free service such as Yahoo or Gmail.

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

Business Credit Reports

Much like your consumer credit report does for the individual, business credit reports detail the credit history of your business. Basically, they are a tool to help lenders determine how credit worthy your business is.

Where do business credit reports come from? There are a lot of different places, but the main ones are Dun & Bradstreet, Experian, Equifax, and FICO SBSS. You have no way of knowing which one your lender will choose. So, you need to make sure all of these reports are up to date and accurate.

Other Business Data Agencies

In addition to the business credit reporting agencies that directly calculate and issue credit reports, there are other business data agencies that affect those reports indirectly. Two examples of this are LexisNexis and The Small Business Finance Exchange. These two agencies gather data from a variety of sources, including public records. This means they could even have access to information relating to automobile accidents and liens. While you may not be able to access or change the data these agencies have on your business, you can ensure that any new information they receive is positive. Enough positive information can help counteract any negative information from the past.

Identification Numbers

In addition to the EIN, there are identifying numbers that go along with your business credit reports. You need to be aware that these numbers exist. Some of them are assigned by the agency, like the Experian BIN. One, however, you have to apply for. It is absolutely necessary that you do.

Dun & Bradstreet is the largest and most commonly used business credit reporting agency. Every credit file in their database has a D-U-N-S number. To get a D-U-N-S number, you have to apply for one through the D&B website.

Business Credit History

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

It includes a number of things like:

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

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

Business Information

On the surface, it seems obvious that all of your business information should be the same across the board everywhere you use it. However, when you start changing things up like adding a business phone number and address or incorporating, you may find that some things slip through the cracks.

This is a problem because a ton of loan applications are turned down each year due to fraud concerns simply because things do not match up. Maybe your business licenses have your personal address but now you have a business address. You have to change it. Perhaps some of your credit accounts have a slightly different name or a different phone number listed than what is on your loan application. Do your insurances all have the correct information?

The key to this piece of the business fundability puzzle is to monitor your reports frequently.

Financial Statements

First, there is the obvious. Both your personal and business tax returns need to be in order. Not only that, but you need to be paying your taxes, both business and personal.

Business Financials

It is best to have an accounting professional prepare regular financial statements for your business. Having an accountant’s name on financial statements lends credence to the legitimacy of your business. If you can’t afford this monthly or quarterly, at least have professional statements prepared annually. Then, they are ready whenever you need to apply for a loan.

Personal Financials

Often tax returns for the previous three years will suffice. Get a tax professional to prepare them. This is the bare minimum you will need. Other information lenders may ask for include check stubs and bank statements, among other things.

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

Bureaus

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

In addition to FICO reporting personal credit, you have ChexSystems. In the simplest terms, this keeps up with bad check activity and makes a difference when it comes to your bank score. If you have too many bad checks, you will not be able to open a bank account. That will cause serious fundability issues.

For this point, everything comes into play. Have you ever been convicted of a crime? Do you have a bankruptcy or short sell on your record? How about liens or UCC filings? All of this can and will play into the fundability of your business.

Personal Credit History

Your personal credit score from Experian, Equifax, and Transunion all make a difference. You have to have your personal credit in order because it will definitely affect the fundability of your business. If it isn’t great right now, get to work on it. The number one way to get a strong personal credit score or improve a weak one is to make payments consistently on time.

Also, make sure you monitor your personal credit regularly to ensure mistakes are corrected and that there are no fraudulent accounts being reported.

Even the Application Process Matters

Often this part isn’t even considered by those looking for the best business loans. For example, consider the timing of your application. Is your business currently fundable? If not, do some work first to increase fundability.

Then, are your business name, business address, and ownership status all verifiable. Lenders will check into it. Also, make sure you choose the right lending product for your business and your needs. Do you need a traditional loan or a line of credit? Would a working capital loan or expansion loan work best for your needs? Choosing the right product to apply for can make all the difference.

Increase Fundability to Get the Best Business Loans

How do you get the best business loans? You need to know how to find the best business loans for your specific business needs. Make sure your fundability is as strong as possible. Pay bills on time, work on building business credit, and make sure to dot all your i’s and cross all your t’s. Do these things, and most all business loans will be yours for the taking.

The post How Being Fundable Helps You Get the Best Business Loans appeared first on Credit Suite.