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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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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.
Do you know where to establish business credit during a recessionary period? When you are first beginning to establish company credit, your very first step should be vendor or trade credit. This is called starter vendor credit. It is an almost magical way to get started. We can show you how to build business credit step by step.
No matter what, you want to enter into good credit practices. Hence this is everything from not borrowing too much, to paying your debts back promptly. And it also includes staying on good terms with your sources of credit. The absolute most vital thing you can possibly do, which will make the swiftest and greatest beneficial effect, is to pay off your invoices punctually or early. And develop a responsible and good payment record.
Are you asking, ‘do business credit cards build credit?’ They do! No doubt, this is the best way to build business credit. This even works during a recessionary period.
You will have to launch a commercial credit profile and score with what are called starter vendors (also known as trade accounts or trade lines). Vendor credit merchants are ones who will give your small business initial credit. And they will do so even though your company has no credit, no score, or no trade lines.
Many of the more prominent and better known merchants will not extend to you initial starter credit. So do not even try starting a credit application with them.
Here are three vendor accounts which you can use to begin to develop your commercial credit. This is where to establish business credit. And bear in mind: if you are declined in the beginning, keep trying!
These are excellent vendors to build business credit!
Uline Shipping Supplies is a true starter vendor. You can find them online at www.uline.com.
This company offers for sale shipping, packing, and industrial supplies. These feature janitorial products and shipping boxes. And they also sell material handling products such as hand trucks and dollies. Most importantly, they report to Dun and Bradstreet.
This is the fastest way to build business credit. It’s a great way to get a build business credit card.
Quill is another true starter vendor. You can find them online at www.quill.com.
They market office, packaging, and cleaning products. Their product lines also feature toner, office furniture, and the like.
Quill reports to Dun and Bradstreet and Experian.
How do you build business credit fast? This is the way to know how long does it take to build business credit.
Grainger Industrial Supply is also a true starter vendor. You can find them online at www.grainger.com. They sell safety equipment, plumbing supplies, and more, and they report to D&B.
It’s an awesome way to build business credit fast no personal guarantee.
These are some of our favorite companies that help build business credit.
Need to know how to build your business credit?
Business credit is credit in a small business’s name. It doesn’t connect to an owner’s personal credit, not even if the owner is a sole proprietor and the only employee of the company.
Thus, an entrepreneur’s business and individual credit scores can be very different.
This is how to build your business credit.
Considering that small business credit is independent from consumer, it helps to protect a small business owner’s personal assets, in case of a lawsuit or business insolvency.
Also, with two separate credit scores, a small business owner can get two different cards from the same merchant. This effectively doubles purchasing power.
Another benefit is that even startup ventures can do this. Visiting a bank for a business loan can be a recipe for disappointment. But building small business credit, when done the right way, is a plan for success.
Consumer credit scores are dependent on payments but also other elements like credit use percentages.
But for business credit, the scores really only hinge on if a small business pays its debts in a timely manner.
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.
How do you build business credit?
Building small business credit is a process, and it does not happen without effort. A business will need to actively work to build business credit.
That being said, it can be done readily and quickly, and it is much more efficient than building individual credit scores.
Vendors are a big aspect of this process.
Performing the steps out of order will cause repetitive rejections. 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.
This is how you’re going to build business credit fast.
A business needs to be fundable to lending institutions and merchants.
Therefore, a company will need a professional-looking web site and e-mail address. And it needs to have website hosting bought from a vendor like GoDaddy.
Also, business telephone and fax numbers ought to have a listing on 411.com.
Likewise, the company telephone number should be toll-free (800 exchange or the like).
A company will also need a bank account dedicated only to it, and it must have every one of the licenses essential for running.
This is how to build credit for your business.
If you’re asking ‘how do I build my business credit?’ – this is how.
These licenses all have to be in the specific, accurate name of the small business. And they need to have the same business address and phone numbers.
So note, that this means not just state licenses, but potentially also city licenses.
Particularly during a recessionary period, you want to get this right.
Visit the IRS website and obtain an EIN for the business. You can build business credit for free, but at least they’re totally free. Select a business entity such as corporation, LLC, etc.
A small business can get started as a sole proprietor. But they will most likely want to switch to a form of corporation or an LLC.
This is in order to lessen risk. And it will maximize tax benefits.
A business entity will matter when it concerns taxes and liability in case of litigation. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. Nobody else is responsible.
This is how to build business credit for an LLC.
Are you asking, ‘how to build my business credit?’ – here’s how.
If you run a company as a sole proprietor, then at 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 company name. Hence, you can end up being directly accountable for all business debts.
Plus, according to the IRS, using this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 chance for corporations! Prevent confusion and noticeably reduce the odds of an IRS audit at the same time.
Begin at the D&B website and get a totally free D-U-N-S number. A D-U-N-S number is how D&B gets a business in 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 websites for the company. 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.
In this way, Experian and Equifax will have something to report on.
This is how you can tell yourself – build my business credit!
First you need to establish trade lines that report. This is also called starter vendor credit. Then you’ll have an established credit profile, and you’ll build business credit score.
And with an established business credit profile and score you can begin to get credit from retailers. And you’ll be able to get more universal credit, like with MasterCard and Visa.
These types 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 usually Net 30, instead of revolving.
So, if you get approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, like within 30 days on a Net 30 account.
This is how to build business credit score.
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.
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 must pay back what you borrowed or the credit you used.
Start your business credit profile the right way and get vendor accounts reporting to the business credit reporting agencies. As soon as that’s done, you can then use the credit.
Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
This is how to build business credit in 30 days.
Not every vendor can help in the same way true starter credit can. These are merchants that will grant an approval with nominal effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
You want at least 3, better with 5 to 8 of these to move onto the next step, which is retail credit. But you may need to apply more than one time to these vendors. So, this is to validate you are responsible and will pay timely.
For three excellent starter vendors, check above – Uline, Quill, and Grainger.
Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to at least one of the CRAs, a trade account which does not report can nonetheless be of some value.
You can always ask non-reporting accounts for trade references. Also credit accounts of any sort will help you to better even out business expenditures, therefore making financial planning easier. These are providers like PayPal Credit, T-Mobile, and Best Buy.
Once there are maybe 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to retail credit. These are service providers which are more likely to offer revolving rather than net terms.
If you can, just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications. It’s how to build business credit without using personal credit.
It’s how to build credit for a small business.
Are there perhaps 8 to 10 accounts reporting? Then move onto fleet credit . These are cards for companies where you can use this credit to buy fuel, and to fix, and take care of vehicles. Only use your Social Security Number and date of birth on these applications for verification purposes. But that’s only if it’s possible. Federal law requires a Social Security number when applying with banks. So if a credit card ultimately comes from a bank, then your SSN is a requirement.
For credit checks and guarantees, make certain to apply using the small business’s EIN.
Have you been responsibly handling the credit you’ve up to this point? Then move to more universal credit for places such as Visa and MasterCard. If you can, only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.
If you have 14 or so trade accounts reporting, then these are attainable.
It’s how to build small business credit.
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.
Know what is happening with your credit. Make certain it is being reported and deal with any inaccuracies ASAP. Get in the habit of taking a look at credit reports and digging into the particulars, and 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. See: www.creditsuite.com/monitoring.
At D&B you can monitor at: www.dandb.com/credit-builder. At Experian, you can monitor your account at: www.smartbusinessreports.com/Landing/1217/. And at Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Experian and Equifax cost about $19.99; D&B ranges from $49.99 to $99.99.
Update the data if there are mistakes 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.
This is another way how to build credit for business.
So, what’s all this monitoring for? It’s to contest any problems in your records. Errors in your credit report(s) can be corrected. But the CRAs often 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.
Disputing credit report inaccuracies usually means you send a paper letter with duplicates of any proofs of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always mail copies and keep the original copies.
Fixing credit report mistakes also means you precisely spell out any charges you contest. Make your dispute letter as understandable 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 company’s Equifax report by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.
You can dispute inaccuracies on your or your small 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.
This is another one of many ways to build business credit.
Always use credit responsibly! Never borrow more than what you can pay back. Keep track of balances and deadlines for repayments. Paying off punctually and fully will do more to elevate business credit scores than pretty much anything else.
Growing company credit pays off. Good business credit scores help a business get loans. Your lender knows the small business can pay its financial obligations. They recognize the company is bona fide.
The company’s EIN attaches to high scores and lenders won’t feel the need to require a personal guarantee.
Business credit is an asset which can help your business in years to come.
Getting merchant accounts for business credit signifies that you are on your way to obtaining great small business credit. Once you have more than five vendor accounts and they are all reporting with the bigger business credit bureaus, then you can begin to access retail credit. These three should quickly get you started.
And now you know where to establish business credit, even during a recessionary period.
The post Where to Establish Business Credit During a Recessionary Period appeared first on Credit Suite.