Tag: Luck

7 SBA Loan Options That Don’t Require Luck

Why Should You Want an SBA Loan?

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

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

Overview of Qualifications for SBA Loans

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

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

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

#2 SBA CapLines

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SBA Loan Approval is Not Just Luck of the Draw

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

The post 7 SBA Loan Options That Don’t Require Luck appeared first on Credit Suite.

What’s Luck Have to Do With It? 5 Credit Score Myths About Your Business

A strong business credit score does not just appear at the end of the rainbow. There are a lot of myths out there.  So many so, that it can be difficult to separate reality from fiction. Don’t fall for these 5 credit score myths. 

Don’t Believe These 5 Credit Score Myths When it Comes to Your Business

Most of the confusion comes from a lack of understanding about business credit scores.  Many do not even know what it is, how you build it, or even that it exists.  Let’s take a look at each of these common 5 myths about credit scores and clear up a few things. 

5 Credit Score Myths: If You Have Business Debt, You Have a Business Credit Score

This may well be the most common of these 5 myths about credit score.  A lot of business owners have some vague idea that a credit score for their business is a thing, but they totally miss the boat on how it actually works. They know they have a personal credit score because they have personal debt. They know that their credit score depends on how well they handle that personal debt, and how much they have.  As a result, most believe business credit builds the same way. This could not be further from the truth. 

Building Business Credit

You do not automatically have a business credit profile. You have to intentionally set up your business properly to establish a business credit profile. Then, your business credit accounts do not automatically report your payments to the business credit reporting agencies. That means, you do not necessarily have accounts reporting positive payment history, even if you are handling your business credit responsibly. You have to seek out accounts that will report.

Keep your business protected with our professional business credit monitoring.

This makes building a strong business credit score a little trickier than building a strong personal credit score.  A business credit expert is a great resource to help you make sure your business is set up properly, establish your business credit profile, and find accounts that will report your on-time, consistent payments.  Don’t leave it to luck. It won’t happen.

5 Credit Score Myths: If Your Personal Credit Score is Good, You Do Not Need a Business Credit Score

Because you can get a business loan with a good personal credit score, a lot of business owners think they don’t need to worry about their business credit score.  However, there are a number of reasons to work on building a strong business credit profile regardless of your personal credit report. For example:

  • Having separate business credit keeps some business accounts from affecting your personal credit report. This can keep you from running into trouble buying a home or car if your business struggles.
  • Separate business credit opens more funding opportunities so that you can access more money for your business.
  • Even when lenders rely on your personal credit score, a strong business credit score can help you get better rates and terms than you would otherwise.

While it is possible to fund a business totally on the merits of a good personal credit history, it is not efficient or wise, and it will lower your personal credit score. 

5 Credit Score Myths: Personal Credit Score Doesn’t Affect Business Credit Score

Your business credit profile, if set up properly, is all together separate from your personal credit profile. Handled the right way, business accounts do not show up on or affect your personal credit report. However, the reverse is not necessarily true.

In some cases, your personal credit score may be used in the calculation of your business credit score.  Not only that, but it is always a consideration when it comes to the overall fundability of your business. This means that even if you have a solid business credit history, you can’t ignore your personal credit score. 

5 Credit Score Myths: You Can Monitor Business Credit for Free

It makes sense. I mean, you can get a free copy of  your business credit report. There are a ton of free apps that let you peek at your personal score throughout the year.  Why wouldn’t you be able to do this with business credit?

Keep your business protected with our professional business credit monitoring.

There are no free business credit monitoring services, though you may be able to get a peek or a sample one time for free. The business credit reporting agencies offer some options for a fee, but Credit Suite can help you monitor your business credit score for a fraction of the price.

5 Credit Score Myths: You Don’t Need Anyone to Help You Build Your Business Credit Score

Credit repair companies are abundant when it comes to personal credit. Many of them are simply trying to make a buck. It’s almost always a scam. The only sure fire way to fix your personal credit score without ending up worse off in the long run is to pay your bills consistently on-time.

This is not necessarily true when it comes to your business credit score. A business credit expert can help you in a number of ways.  They have relationships with vendors, lenders, and other knowledge that can be extremely valuable as you work to establish and build a strong business credit profile. 

Analyze Fundability

A business credit expert can help you analyze and assess the overall fundability of your business.  While it may technically be possible to do this yourself, it is a huge job. It takes a lot of time, and there are so many factors to consider it can be easy to miss something. Furthermore, it can be difficult to access some of the information.  A business credit expert will have the contacts and expertise necessary to talk to the right people at the right place to get things done.

Keep your business protected with our professional business credit monitoring.

Properly Set Up Business Foundation

As mentioned earlier, your business has to be set up properly before you can even establish a business credit profile, let alone build a business credit score.  A business credit expert can work with you to determine if your business foundation is set up as it needs to be. If not, they can help you fix that. 

Get Accounts Reporting

Even with a business credit profile, there is no credit score until you have accounts reporting. The thing is, not all business accounts report payments to the business credit reporting agencies. In fact, very few of them do.  What’s worse, is most companies do not make it clear to customers whether or not they report payments.

A business credit expert has relationships with specific vendors that they know report payments. You don’t have to rely on trial and error.  Doing that, you could go months thinking you are building your credit score and really, nothing at all is happening. Working with an expert ensures you get on the right track and head down it as quickly as possible. 

Your Business Credit Score is Not Found at the End of the Rainbow

When it comes to building strong fundability with the best business credit profile and highest business credit score possible, strategy trumps luck every time.  You have to be intentional and follow the process.  Once business owners know this, most are willing.  The problem is, it is difficult to navigate these waters alone.  Lenders and vendors do not always offer up the information needed easily.  Also, few average Joe business owners know where to look or what to look for to evaluate fundability.  This is where a business credit expert is priceless.  They have the knowledge and skills needed to speed up the process exponentially.  This not only saves time, but in the long term it also saves money. Get your free consultation with a Credit Suite business credit expert today.

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