Land Minority Small Business Loans to Fund Your Business

If you are a person of color who runs a business, you could end up having some trouble finding traditional loans that will work with your unique needs. Typically, there are not a lot of loans designed specifically for minority business owners. However, there are some loan options that work better than others.

How to Find Minority Small Business Loans: What You Need to Know

What’s the trick to finding minority small business loans? Where is a minority business owner to go when the traditional options for loans do not work out? There are a few options for minority small business loans that you may not realize are out there. Some involve the government through the Small Business Administration, while others involve going a more non-traditional route with private lenders.

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

Where to Start with Minority Small Business Loans: The Small Business Administration

You cannot talk about minority small business loans without some discussion on the SBA. While they do not lend funds themselves, they do handle the administration of a number of loan programs that help all small businesses get the funds they need through partner lenders.

Minority Small Business Loans: 7(a) Loans

This is the Small Business Administration’s most known program. It provides federally funded term loans up to $5 million. The funds can be used for a number of purposes. These include expansion, purchasing equipment, working capital and more. Banks, credit unions, and other specialized institutions in partnership with the SBA process these loans and disburse the funds.

Minority Small Business Loans: 504 Loans

504 loans are also available up to $5 million and can buy machinery, facilities, or land. Typically, they are used for expansion. They work especially well for commercial real estate purchases.

Minority Small Business Loans: Microloans

These are $50,000 or less. They work well for starting a business, purchasing equipment, buying inventory, or general working capital.

Minority Small Business Loans: SBA Express Loans

These are fast turnaround loans, with the SBA taking up to only 36 hours to give a decision. There is less paper work as well, which is part of what makes express loans great if you qualify.

Minority Small Business Loans: SBA Community Advantage Loans

This is a pilot program running through 2020, with the potential for extension. Its purpose is to promote economic growth in underserved areas and markets. Decision makers look past such things as poor credit or low revenue if the business has the potential to create jobs or promote economic growth in underserved areas.

These are some of their most popular programs. The Small Business Administration does so much more for small businesses in addition to these. Get more details on the SBA, these loan programs, and additional resources offered by the Small Business Administration here.

Other Options for Minority Small Business Loans: Private Lenders

Though not specific to minorities, some private lenders offer products that work better with the unique needs and challenges of minority business owners than others.

OnDeck

OnDeck offers lines of credit and term loans with fixed interest rates. You can get up to $500,000 with a term loan. Also, they have an A rating with the Better Business Bureau. 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. Find out more about OnDeck in our review.

BlueVine

BlueVine offers a number of financing options including term loans, invoice financing, equipment financing, lines of credit, and merchant cash advances. As a requirement, you have to be in business for at least 6 months. If you need a term loan or a line of credit, then they require a minimum annual revenue of $100,000. For those looking for invoice factoring, the minimum credit score is just 530! If you want a line of credit or term loan, you will need a minimum credit score of 600. They have an A+ rating with the BBB. Find out more about BlueVine in this review.

Funding Circle

If you’re looking for a low APR, then Funding Circle is your go-to. They have fixed rate term loans and require a credit score of 620 or above. Unlike BlueVine, there is no minimum revenue requirement. However, they do require you to be in business for at least 2 years. They have an A+ BBB rating. Find out more in our Funding Circle review.

StreetShares

This company offers invoice financing, term loans, and lines of credit. Similar to others, there is a number of years in business requirement. However, they require less minimum annual revenue than others at only $25,000. Additionally, the minimum credit score is 600. They also have an A+ rating with the Better Business Bureau. Find out more about StreetShares in our review, here.

SmartBiz

SBA loans typically take a lot of time and paperwork. Still, SmartBiz found a way to speed things up. They make it easier than ever. Unfortunately, they do have stricter requirements. For example, your credit score has to be at least 650. Also, you have to be in business for 2 years or more. Further, annual revenue has to be $50,000 at least. There can be no outstanding liens, bankruptcies, or foreclosures in the past 3 years either.

Tips for Landing A Minority Small Business Loan

Once you know where to go to get minority small business loans, you need to know how to get them. Meeting all the requirements is the first part, but these tips can help you out even more.

Appear Fundable

A business that appears fundable to a lender is an established business separate from its owner. It is complete, organized, and either has solid revenue or a solid startup plan.

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

To appear fundable, a business needs:

To be formally incorporated as an S-corp, LLC, or a corporation.
An EIN from the IRS. This is an identifying number for your business that functions similar to the way your SSN does for you personally.
A dedicated business bank account.
Contact information that is different from the owner’s. A separate telephone number on a toll-free exchange and a dedicated physical address are imperative.
A professional website and an email address that has the same URL. Free web hosting and email services won’t do the job in this case.

Find out more about fundability here.

You Must Have a Business Plan

Lenders want to see a professional business plan. Even if you are not a startup a plan is necessary. Startups need a plan so that lenders can see they know what they are doing. Established businesses need to show how they plan to use the funds. Lenders want to see that they have research to show the market supports that plan. Find out more about business plans here.

Be Prepared

It is almost impossible to over prepare when applying for a loan. Consequently, you should try to anticipate any questions. Pull together forms and documentation they may ask for. Items such as past tax returns, financials, and licenses are common. The more you have ready to go before you start, the faster and easier the process will be.

Your Personal Credit Has to Be Strong

You need a solid personal credit score to land the best small business loans. There is just no way around it. As you can see above, a score of 600 or above is required almost across the board with the exception of some invoice factoring options.

Remember, it is possible to improve your personal credit score. The first step is to get a copy of your credit report. You can get a free copy each year. Look for what may be having a negative impact. If there are mistakes, contact the credit agency in writing to have them removed. If late payments are the issue, start paying on time. You cannot fix a problem until you know what the problem is.

Business Credit Is Important Too

Of course, when it comes to minority small business loans, you cannot ignore business credit. While it isn’t listed as a primary requirement for most lenders, having a strong business credit score can only help you.

If a lender sees a personal score that isn’t exactly what they need, they may take business credit into consideration when making their decision. In addition, if you qualify for the loan and have good business credit, you may be able to get a lower interest rate.

Additional Options for Funding a Minority Owned Business

Grants are also an option for minority business owners. They can help bridge funding gaps and stretch funds from minority small business loans. However, they are highly competitive. Many are only available to those that meet very specific criteria. Here is just a sample of some minority business grants that are out there.

First Nations Development Institute Grants

The mission of this group is to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans. Not only that, but there are a wide range of opportunities from the First Nations Development Institute. There is a mailing list you can join to receive information about new opportunities as they become available.

National Black MBA Association Scale-Up Pitch Challenge

Also known as NBMBAA, the Scale-Up Pitch Challenge offers cash prizes ranging from $1,000 to $50,000. The association says its purpose is to help newer businesses that have an African founder that maintains equal ownership.

A business must be a member of the NBMBAA to compete. There is a $10 monthly membership fee. After that, there is an online application. If chosen, you must submit a pitch that lasts three minutes. After that, finalists go on to compete at the NBMBAA annual conference.

Other Grant Options: Non-Minority Specific

There are grant options that can work well even though they are not exclusively for minorities. They are available to everyone, including minorities. Some examples include the following.

FedEx Small Business Grant

This grant is how FedEx is working to strengthen small business innovation. There are 10 grants the company awards each year. They range from $15,000 to $50,000, and if you’re a business with a cutting-edge product, this could be a great opportunity.

A business must use the FedEx website to submit entries. There are a few questions to answer about your business. In addition, there is a requirement for an elevator pitch about what makes your business special. Also, you have to explain how you would use the funds. A 90 second video submission is an option as well.

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

NASE Growth Grants

The National Association for the Self-Employed (NASE) has small business Growth Grants of up to $4,000. They are for micro-businesses, and proceeds can be used for a number of things. They can be utilized for marketing, advertising, expansion, and even to hire employees. These grants are open to everyone. However, you do have to be an NASE member to apply. Membership fees vary based on the membership level chosen.

USDA Value Added Producer Grant

The USDA’s Value-Added Producer Grant (VAPG) program offers grants for small businesses. It includes minority owned business. Grants range up to $250,000. They are specifically to help agricultural producers with activities that add value to their products. As a result, grants are open to those in rural areas. They must be operating as one of the following:

Cooperative
Farmer
Rancher
an independent agricultural producer
or an agricultural producer group

Know Your Options for Minority Small Business Loans and Other Resources

As a minority business owner, it is important that you know what options are available to you regarding funding and support. The list above is a starting point, but here is so much more out there. Be sure to do your own research. In addition, get your personal and business credit in order, and be sure your business is fundable, so that you do not miss out on an opportunity.

The post Land Minority Small Business Loans to Fund Your Business appeared first on Credit Suite.

Get Small Loans For Your Business the Easy Way With a Great Bank Rating

Even small loans can be challenging without a great bank rating. Learn why this little-known number matters, and how you can improve yours.

Need Small Loans for Your Business?

Even the search for small loans can be a recipe for frustration if you aren’t ready and don’t take the time to build your bank credit score. But what’s a bank credit rating, anyway?

Your Bank Credit Score – What’s it All About?

Do you know the distinction between bank credit scores and small business credit?

Company credit is the full and complete amount of money that your business can get from all manner of creditors. That means the banking system, credit unions, credit card companies, and also leasing firms. And it also means providers, under what’s called trade credit or vendor credit or trade lines. That is, the vendor credit tier.

A bank credit rating, on the other hand, is a measure of the full amount of borrowing capacity which a business can get from the banking system only.

Bank Credit Scores Clarified

A business can get more company credit promptly, so long as it has at the very least one bank reference and an average daily account balance of at the very least $10,000 for the most recent three month time period. This setup will generate a bank credit score of a Low-5. So this means it is an Adjusted Debt Balance of from $5,000 to $30,000.

A lower rating, like a High-4, or balance of $7,000 to $9,999 will not instantly turn down the small business’s loan application. Nevertheless, it will slow down the approval process.

What is a Bank Score?

A bank rating is a measure of the average minimum balance as kept in a business bank account over a 3 month long period. Hence a $10,000 balance| will rank as a Low-5, a $5,000 balance will rank as a Mid-4. So a $999 balance will rate as a High-3, etc.

A company’s chief objective should always be to maintain a minimum Low-5 bank rating (or, an average $10,000 balance) for at least three months. This is because, without a minimum of a Low-5 score, most banks will operate under the assumption that the business has little to no capacity to pay off a loan or a business line of credit.

But there is one thing to remember: you will never actually see this number. The financial institution will simply keep this number in its back pocket.

The Bank Score Ranges

The numbers work out to the following ranges:

To get a High-5 score, your company will need to have an account balance of $70,000 to $99,999. For a Mid-5 score, your business must have an account balance of $40,000 to $69,999. And for a Low-5 rating, your business needs to hold onto an account balance of $10,000 to $39,000. So your company needs this level bank score or better to get a bank loan.

For a High-4 score, your company has to have an account balance of $7,000 to $9,999. And for a Mid-4 rating, your small business must maintain an account balance of $4,000 to $6,999. So for a Low-4 score, your small business will need to have an account balance of $1,000 to $3,999.

Ruining Your Bank Score

Unfortunately, there are a lot of ways to really destroy your bank rating. Here are 7 – and how you can fix them in order to get small loans or really any level of financing.

7th Way to Ruin Your Bank Credit Score and Lose Out on Small Loans

Do not maintain a minimum balance for a minimum of three months. Given that every bank rating cycle is based on the previous 3 months, a continuously seesawing balance ought to damage your bank score.

6th Way to Destroy Your Bank Credit

Don’t bother to ensure that your business bank accounts are reported precisely the same way as all of your small business documents are, as well as with the exact same physical address (no post office box) and telephone number. Sow confusion here by editing one and not another, or not remedying an error if there is one.

Small Loans

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a get a bank loan for your business.

5th Way to Destroy Your Bank Credit and Lose Out on Small Loans

To accompany #6, do not see to it that each and every credit agency and trade credit supplier also lists the business name and address the precise same way. This is every keeper of financial documents, earnings and sales taxes, internet addresses and e-mail addresses, directory assistance, and so on.

No loan provider is going to stop to consider the myriad manners in which a business might be listed, when they explore the business’s creditworthiness. For this reason if they are not able to locate what they need quickly, they will either deny an application or it won’t be reported to a business credit reporting agency such as Experian, Equifax or Dun & Bradstreet.

Therefore, if they are not able to discover what they need quickly, they will just reject the application. So see to it your records are a mess!

4th Way to Damage Your Bank Credit Score

Never manage your bank account responsibly. This means that your small business must not avoid writing non-sufficient funds (NSF) checks at all costs, because those annihilate bank ratings. Non-sufficient-funds checks are something which no business can afford to let happen.

Balancing checkbooks and accounts is so dull anyway. You’ve got adequate money without even making sure, right?

3rd Way to Destroy Your Bank Credit Rating and Lose Out on Small Loans

To add to #4, do not include overdraft protection to your bank account ASAP, in order to avoid NSFs. Why bother thinking in advance or preparing for the future? Everything is going to be fantastic forever, right?

Writing checks insufficient funds (NSFs) is a sure way to destroy your bank score.

2nd Way to Damage Your Bank Credit Score

Do not let your small business show a positive cash flow. The cash coming in and leaving your business’s bank account must show a positive free cash flow.

A positive free cash flow is the quantity of profits left over after a business has paid every one of its expenses. According to Investopedia, it “represents the cash a company can generate after required investment to maintain or expand its asset base. It is a measurement of a company’s financial performance and health.”

When an account shows a positive cash flow it indicates your small business is producing more earnings than is used to run the business. That means the financial institution will feel your company can pay its expenses.

So if you actually intend to trash your bank score, get whatever’s expensive for your business so your expenses overtake your profits. Doesn’t every manufacturing facility deserve plush carpeting in the loading dock?

Small Loans

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a get a bank loan for your business.

1st Way to Ruin Your Bank Credit and Lose Out on Small Loans

Financial institutions are extremely motivated to lend to a company with consistent deposits. And a business owner should also make regular deposits in order to preserve a positive bank score. The business owner needs to make several regular deposits, greater than the withdrawals they are making, in order to have and preserve a good bank rating. If they can do that, then they will have a great bank credit rating.

Consistency is the hobgoblin of little minds, right? So be a free spirit!

Damage Your Business’s Bank Score and Losing Out on Small Loans – Even Though You Will Never See This Number

You, the entrepreneur must never make regular deposits. And these deposits ought to never be more than the withdrawals you are making, in order to ruin your bank credit rating.

If you can do these things, then your company will have a dreadful bank credit rating. And, subsequently, a bad bank credit rating means your firm is far less likely to get small business loans.

Just Kidding: Obviously We Do Not Really Want You to Miss Out on Small Loans!

So, where do you go from here?

The First Great Way to Rescue Your Bank Credit Score

Possibly the most convenient way to attain and maintain a good bank credit is to deposit at least $10,000 into your small business bank account and maintain it there for as much as a half year. While you will still have to make consistent deposits, this one straightforward step will aid in 3 ways.

One, you will have maintained an excellent minimum balance for at the very least three months. Two, you will probably not overdraw with such an excellent balance. And three, you will get to the magic minimum for a Low-5 bank credit rating. Hence you will be dealing with our #4 and #7, above.

And you might even have the ability to get around our #3. But we still highly recommend overdraft protection.

The Second Wonderful Way to Rescue Your Bank Credit Rating

A 2nd need is to make sure your small business account details are consistent across the board, all over. While it might take some work order to ensure everything is right, you will be taking care of #5 and #6, above.

The Third Great Way to Rescue Your Bank Credit

A third necessity is to make regular deposits. And make certain they are more than the quantities you are withdrawing every month. This will take care of our #1 and #2 smoothly.

Takeaways for Your Bank Credit Rating and Small Loans

Your bank rating is not to be trifled with. Although the financial institutions maintain a secret regarding them, failing to keep your bank credit rating high will make it a great deal harder to do well in business. You might not even get small loans, so be diligent!

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a get a bank loan for your business.

The post Get Small Loans For Your Business the Easy Way With a Great Bank Rating appeared first on Credit Suite.

Business Analyst for the Small Business The solution profess…

Business Analyst for the Small Business The solution professional will absolutely be able to recognize as well as likewise examine the little business what solution options require to be made. He or she can disclose the little solution precisely just how to bring out innovative solution methods. A fantastic solution specialist will absolutely be able … Continue reading Business Analyst for the Small Business
The solution profess…

Choosing a Lender for Your Small Business Loan

Picking a Lender for Your Small Business Loan

Choosing a loan provider can be as tiresome as well as described a procedure as preparing a service strategy or lending proposition. Numerous entrepreneur and also prospective local business owner are so worried concerning being accepted on a company car loan that they neglect the relevance in choosing a loan provider.
A big component of the lending institution’s threat is the unpredictability relating to the car loan payment. By picking a lending institution in which you currently have a connection, it can substantially lower the unpredictability concerning your as well as your organisation, placing you in a far better placement of being authorized for a financing. If you have a home mortgage with a financial institution, that exact same financial institution is most likely a great location to begin asking regarding a service finance when you’re concentrated on picking a lending institution.
If you have factor not to make use of a lending institution in which you have a previous or present connection, think about choosing a lending institution that * desires * your financing company. Resources for these loan providers can be located in the company area of your neighborhood paper for unique funding deals.
In the circumstances that you are a financial institution client, think about a credit score union when choosing a loan provider. Bigger financial institutions often tend to have even more stiff regulations as well as procedures connected with little company car loans.
Recognize a number of selections for lending institutions prior to choosing a loan provider for your lending proposition. Also if you really feel that your front runner of a lending institution will certainly accept your funding application, explore a number of various other lending institutions prior to picking a lending institution to give your finance.
1. See to it that the lending institution is best regards thinking about your service.
If you obtain the sensation that your finance is “simply one more number,” as an example, it might be risk-free to opt for your impulses and also look for a various lending institution.
2. Validate that you’ll obtain the solutions that you want for your car loan.
When choosing a financial institution or various other lending institution, make certain to choose one that will certainly supply you with the solutions you require. As an instance, if electronic banking is essential to you as a result of its practical attributes, do not choose a financial institution that costs for these solutions, or one that does not use a complete series of solutions that will certainly make your finance experience less complicated and also easier for you.
2. Select a lending institution that “really feels right” in every little thing that it can provide you as well as your company.
Picking a loan provider, and also inevitably selecting a lending institution, need to consist of the suggestion that this is a lending institution in which you really feel comfy with establishing a lasting partnership. Concentrate on the worth of your organisation to the neighborhood, as well as what its future down payments might suggest to the financial institution. The lending institution needs to treat you with regard, as well as must appreciate your company suggestions.
When choosing a lending institution, take into consideration the adhering to inquiries:
– Does the loan provider have a market specialized pertaining to your particular company?
– What is the ordinary dimension company in which the loan provider normally accepts for financings?
– What are the information of the lending institution’s lending customer specialist histories? Is the lending institution even more of an industrial or customer loan provider?
– How long has the lending institution stayed in business?
These concerns to ask when picking a loan provider are vital for a couple of factors. Smaller sized, neighborhood financial institutions, on the various other hand, might enable you the possibility to function with a lender that will straight make the choice as to whether or not to financing you the cash, or might have close connections with the financial institution pecking order. It could likewise relocate the financing procedure along a lot extra quickly.
When lastly making your choice on a very first option for a loan provider, submit your application as well as funding proposition with that lending institution. Take the time required, and also be client, both with choosing a loan provider as well as acquiring a tiny service lending.

If you have a home loan with a financial institution, that exact same financial institution is possibly an excellent location to begin making inquiries concerning a company financing when you’re concentrated on picking a loan provider.
If you have factor not to utilize a loan provider in which you have a previous or existing connection, take into consideration choosing a loan provider that * desires * your financing company. Choosing a loan provider, and also eventually picking a lending institution, must consist of the suggestion that this is a loan provider in which you really feel comfy with establishing a lasting partnership. When lastly making your choice on a very first option for a lending institution, submit your application as well as funding proposition with that loan provider. Take the time required, and also be client, both with picking a loan provider as well as getting a tiny company financing.

The post Choosing a Lender for Your Small Business Loan appeared first on ROI Credit Builders.

Choosing a Lender for Your Small Business Loan

Picking a Lender for Your Small Business Loan

The post Choosing a Lender for Your Small Business Loan appeared first on ROI Credit Builders.

Fundability and How it Helps With Small Business Loan Risk Factors

Small business loan risk factors abound. But you can fix a lot of them with assuring fundability. The easiest way to do this is via building business credit. but first, let’s look at what a bank is going to want to know. they want to assess what sorts of small business loan risk factors you bring to the table.

Answer Lender Questions and Address Small Business Loan Risk Factors With Fundability

Fundability – or, not just the ability to become funded but how desirable a company is for funding – means different things to banks, venture capitalists, angel investors, and informal investors. That being said, they all agree on a few fundamental principles.

1. Do You Have Positive Cash Flow?

Lenders aren’t in the business of giving you gifts. Instead, they would like to see a profit on their investment. For that reason, if you are bleeding funds, they are not going to want to pay for a piece of what, to their minds, is an unsatisfactory financial commitment.

How do you turn it around? Do some economic triage. Perhaps your firm will not need to have an alternative site. Perhaps you don’t need to have a full-time assistant when part-time will do. Maybe you should be leaning harder on your customers with pending invoices. This is one of the biggest small business loan risk factors.

Start-ups will get a different question – see # 2.

2. Do You Have a Great Product or Service?

For startup companies, the concern is more like: do you have a fantastic product or service? A concept in itself is not going to be sufficient, so you also will want to have a comprehensive business system in place. Investors are going to want to see what you can do with your amazing idea, and how it can be successfully monetized.

For a brand-new company this is the biggest of the small business loan risk factors. Otherwise, why bother making a company at all?

3. What Will You Use the Cash For?

If your reply is an unclear, “general fund”, investors are not going to be showing an interest. First of all, they want you to demonstrate you will be responsible with their money. In addition, they also want to know that your business is organized. You can be the most innovative and the very least business-oriented man or woman out there, so long as anyone in your organization is dealing with the financial heavy lifting. Somebody must make sure that the taxes are paid and the invoices go out to your clients.

Investors don’t actually want to see you using the funds for daily operations. If your business is functioning profitably (see # 1), then investors will expect that you can manage those expenses. Rather, they want to see if you are going to employ their funding for something new and different. In general, this implies you must be using their funds for improvement – a new piece of essential machinery; a new shop; a second facility; a new product line – these are just a few plans which would fit the bill for progress.

See # 4 for the similar question for startups. This is another one of the bigger small business loan risk factors. Lenders want to know their money isn’t being thrown away. After all, they make a lot more money if you pay your loan off and pay interest. Getting their money back through collections is a lot less profitable for them.

4. How Much Funding Do You Need to Reach Positive Cash Flow?

For startups, a similar question is: just how much funding will you need to get to positive cash flow and profitability? In this case, your use for the money is still a distinct one – it’s to bring your new business to profitability.

5. How Much Revenue Yearly Can Your Business Generate After Three Years?

This question is the same whether you are presently in business or you are aiming to get a startup business funded. This will separate the lifestyle businesses (designed to make their owners glad but not develop into bigger players) from the scalable businesses. A lifestyle business normally won’t get this sort of funding. Instead, it will be funded by virtue of secured debt or bootstrapping or secured debt.

A scalable business can still be modest and not expect explosive growth, but still be fundable. Your new widget warehouse might begin small. Investors would expect it to have more moderate funding needs.

6. What Number of Your Existing Clients, Channels, and Partners Will Support Your New Business Growth and Volume?

Introducing new markets (or going for new customers or trying to market new products) will be viewed as riskier, unless you have an established history of financial success via pioneering. See # 7 for the semi-comparable question for startup ventures.

7. How Do You Know That Anybody Will Buy Your Product or Service?

If you do not know your market, then you will not know how to target to those customers. If your clients are middle-aged women, they will most likely respond to different techniques than if your customers are teen boys. Merely making a product and flinging it out to the ether, praying someone will buy it, is not going to sit well with investors. Instead, they want you to have scouted out your prospective clientele prior to you coming knocking and asking for funding.

The rest of the questions are only for startups.

8. How Much Funding Can You Get From Friends and Family to Launch Your Business?

Oftentimes these are your most important investors, or they might be your only investors. Treat them well.

9. How Much Funding Can You Personally Add?

Investors would like to know this amount because it indicates a commitment to the startup. If you want to keep your life savings, you’ll be a lot more careful with funds than if you’re just playing around with other people’s money.

10. Who Comprises Your Team?

Your team does not have to be employees of your business. It can also be consultants and mentors. Contact your school. There might be an educator interested in your new business, even if you never took a class with that person. Not a college alum? Try your nearby community college just the same. A professor might even want to use your company experience and story in a lecture.

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

But How Do You Best Address These Small Business Loan Risk Factors? Build Business Credit!

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

Because of this, a business owner’s business and personal credit scores can be very different.

Consumer credit scores depend upon payments but also other elements like credit usage percentages.

But for small business credit, the scores truly only hinge on whether a business pays its debts promptly.

The Process

Building company credit is a process. It does not occur automatically. A company has to proactively work to develop small business credit.

Having said that, it can be done readily and quickly, and it is much quicker than building personal credit scores.

Vendors are a big component of this process.

Doing the steps out of order leads to repetitive denials. Nobody can start at the top with small 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 business needs to be fundable to credit issuers and vendors. This is the best way to address any small business loan risk factors.

Hence, a business needs a professional-looking website and e-mail address. And it needs to have site hosting bought from a vendor like GoDaddy.

Additionally, company telephone and fax numbers need to have a listing on 411. You can do that here: http://www.listyourself.net.

In addition, the business phone number should be toll-free (800 exchange or similar).

A business also needs a bank account dedicated solely to it, and it has to have all of the licenses essential for running.

Licenses and Reducing Small Business Loan Risk Factors

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

So note, that this means not just state licenses, but possibly also city licenses.

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

Working with the Internal Revenue Service

Visit the IRS web site and get an EIN for the business. They’re totally free. Choose a business entity like corporation, LLC, etc.

A company can start off as a sole proprietor. But they more than likely want to change to a variety of corporation or an LLC.

This is to decrease risk. And it will make best use of tax benefits.

A business entity matters when it pertains to taxes and liability in case of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. Nobody else is responsible.

Incorporating is a great way to address small business loan risk factors.

Kicking Off the Business Credit Reporting Process

Begin at the D&B website and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a 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 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.

In this manner, Experian and Equifax have something to report on.

Vendor Credit Tier

First you ought to build trade lines that report. This is also called the vendor credit tier. 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 credit in the retail and cash credit tiers.

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

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

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

Details

Net 30 accounts have to be paid in full within 30 days. 60 accounts need to be paid completely within 60 days. Compared 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 right way, you need 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.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may have to apply more than one time to these vendors. So, this is to validate you are responsible and pay punctually. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move onto the retail credit tier. These are companies which include Office Depot and Staples.

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

One example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or higher.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move onto the fleet credit tier. These are businesses such as BP and Conoco. Use this credit to buy fuel, and to repair, and take care of vehicles. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or higher and a 411 company telephone listing.

Shell might claim they want a certain amount of time in business or revenue. But if you already have adequate vendor accounts, that won’t be necessary. And you can still get approval.

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

Cash Credit Tier

Have you been sensibly managing the credit you’ve up to this point? Then move onto the cash credit tier. These are service providers 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 such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or higher. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Also, they want you to have an established business.

These are commonly MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.

Monitor Your Business Credit and Directly Address Small Business Loan Risk Factors

Know what is happening with your credit. Make certain it is being reported and address any mistakes as soon as possible. Get in the practice of checking 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 only $24/month. See: www.creditsuite.com/monitoring.

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. That will cost about $19.99.

Update Your Information to Address Small Business Loan Risk Factors

Update the details if there are inaccuracies or the details is incomplete.

Fix Your Business Credit to Reduce Your Small Business Loan Risk Factors

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

Disputes and How They Help Reduce Small Business Loan Risk Factors

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

Fixing credit report inaccuracies also means you specifically spell out any charges you dispute. Make your dispute letter as understandable as possible. Be specific about the issues with your report. Use certified mail to have proof that you sent in your dispute.

Taking the initiative and handling any errors as fast as possible will also help address any small business loan risk factors.

A Word about Building Business Credit and Small Business Loan Risk Factors

Always use credit sensibly! Don’t borrow beyond what you can pay back. Track balances and deadlines for payments. Paying off promptly and completely does more to boost business credit scores than just about anything else. And beyond that, responsible account management will counter any small business loan risk factors.

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

The company’s EIN links to high scores and lending institutions won’t feel the need to call for a personal guarantee.

Addressing Small Business Loan Risk Factors: Takeaways

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

The post Fundability and How it Helps With Small Business Loan Risk Factors appeared first on Credit Suite.

Top 5 Things You Didn’t Know About Small Business Credit

There is so much about small business credit that is misunderstood. Many entrepreneurs do not even realize their company can have its own credit. Those that do realize it, often have a very skewed idea about how it works. Because we are so familiar with personal credit, we tend to assume business credit works the … Continue reading Top 5 Things You Didn’t Know About Small Business Credit

Top 5 Things You Didn’t Know About Small Business Credit

There is so much about small business credit that is misunderstood. Many entrepreneurs do not even realize their company can have its own credit. Those that do realize it, often have a very skewed idea about how it works. Because we are so familiar with personal credit, we tend to assume business credit works the same way. While some aspects of the two are similar, there are some very important differences that most entrepreneurs do not know.

Everything You Don’t Know that You Don’t Know About Small Business Credit

Some of the most common misconceptions about business credit are related to how you get it. Even more are about what affects business credit and where the information on the report comes from. It is such uncharted territory that most do not even know what they don’t know.

Once you understand all the differences between business credit and personal credit, you can begin the work of building a solid company foundation for your biz.

5 Things You Didn’t Know About Small Business Credit

Here are a few of the most common misconceptions about business credit.

You Have to Work for Small Business Credit

It doesn’t build on its own through the course of regular company financial transactions. This is different than how personal credit builds. With personal credit, your payment information is simply reported to the personal credit reporting agencies (CRAs.) With business credit, it isn’t so simple.

It takes intentional effort from the way you set up your biz to the accounts you apply for first. You have to go into it with the intention of building business credit. You have to work for it.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

It’s About More than Payment History

Unless your company is set up with the intention of separating it from the owner, business transactions will report to the personal CRAs. This means your corporate transactions and your personal transactions will be reporting on your personal credit. Everything will be all mixed up.

Not only that, but if you do not set things up properly, you could end up not having a business credit score at all! Even if you have credit in your company name, if your firm is not properly set up as a fundable entity, those accounts will be on your personal credit report. You may not even have a business credit report!

Your Personal credit CAN affect it

By nature, the way a company must be set up to build business credit means that your company’s accounts will not affect your personal credit. That is, if everything is set up properly. However, the reverse is not necessarily true. When lenders look at your credit, not only might they pull a personal credit report, but they can use other sources as well. The information gleaned from those sources, even if not firm-related, can affect their decisions.

You are probably asking yourself the question then, why even bother? If your personal credit can still come into play, what’s the point? There are a few reasons biz credit is important. First, it protects your personal credit. Like I said before, if your set up your company properly, your operational finances should not affect your personal credit score. This will ensure that if your biz suffers, your personal finances can still stay intact.

In addition, if personal issues are coming into play when you are trying to get company funding, strong business credit can help. It can mitigate negative personal information lenders may consider in their decision making.

Finally, if you do not have business credit, you will have to fund your dream on your personal credit alone. Personal limits are typically much lower than business credit limits. Conversely, company credit expenses tend to be much higher than personal expenses. This means that even if you are paying off your expenses each month, you are likely to hover near your limits consistently.

That will increase your debt-to-credit ratio, which will in turn lower your personal credit score. So even if you do everything right, you could end up damaging your personal credit if you try to use it to fund your company.

The Information Comes from Places You May Not Expect

Like I said, it’s not all just payment history. There are so many other things the CRAs look at and can report on. They gather information from a number of sources, and not all of them are lenders. For example, the Small Business Finance Exchange, or SBFE, gathers information from a variety of places. These include, among other things, public records. That means every lien, every parking ticket, and every bounced check has the potential to bite you.

You do NOT Have to Have Business Credit to GET It

This is perhaps the most difficult thing for some entrepreneurs to understand. It can seem at the onset that you have to have business credit to get business credit. An entrepreneur is often shocked when they try to apply for funding with biz credit and they are denied, because they pay their bills on time. They cannot figure out what is going on.

They then find out they actually do not have business credit. That is why they are continually denied when they apply for corporate credit cards. Then they wonder how on earth they are supposed to get business credit if they are denied funding because they do not have company credit.

Here is the thing. Once you have your company set up properly as a separate, fundable entity, you need to start working with starter vendors. These are vendors that will extend net terms on invoices without a credit check. Not only that, but they will also report your payments on these invoices to the CRAs. This will be the beginning of your business credit score. You do not have to have business credit to get corporate credit, but you do have to start with starter vendors.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Now That You Know

Now that you know this information, you probably have a ton of questions. Questions like:

How do I make my company a fundable entity separate from myself?
What’s the next step after starter vendors?
Where are lenders getting information about me?
How do I know what is on my credit report?

We can answer these questions and more. The first step is already done. Now you know what you didn’t know before.

How to Separate Your Company as a Fundable Entity

This part is easiest taken care of on the front end. However, it’s never too late. If you are looking for funding, you likely already have an established biz. You can take these steps now to begin building your corporation credit.

How to Separate a Company from Its Owner to Build Small Business Credit

Establish a separate phone number and address for the biz.
Formally incorporate as an LLC, S-corp, or Corporation.
Establish a separate company bank account.
Have a professional corporate website.
Have a separate corporation email address with the same URL as the website.
Get and EIN and use it instead of your SSN to apply for business credit.
Get a D-U-N-S number.

A few things to remember when it comes to these things are that you can get a virtual physical firm address pretty easily. Also, there are several ways to get a corporate phone number online that will simply forward to the phone number you already use. This means there is no need to get a separate phone.

Also, do not use a free hosting service. You need to pay for hosting. The same goes for email service. A free service such as Hotmail, Yahoo, or even Gmail will not work in this situation.

As for a D-U-N-S number, be careful. You really do need it because you cannot have a credit file with Dun & Bradstreet without it. Since they are the largest and most commonly used biz credit reporting agency, having a D-U-N-S number is a must. However, when you go to their website to get one, they will try to upsell you. The number is free, and you do not need anything else. Stay strong.

How to Use Starter Vendors to Build a Small Business Credit Score

Now, you know how to set up your company and you know you need to start with starter vendors, but where do you go from there? The business credit building process works in tiers. You start with the vendor credit tier, which is where the starter vendors are. Then, once you have 8 or 10 of those vendors reporting your positive payment history, you can move on to the retail tier.

The retail credit tier is where you find credit cards that can only be used at the retail stores that issue them. For example, an Office Depot credit card would be in this tier. After you have enough of these types of cards reporting your payment history to the CRAs, you can move on. Your small business credit should then be strong enough to apply for cards in the fleet tier.

The fleet credit tier is where you find the cards that you use specifically for fuel and auto repair and maintenance costs. These are cards from companies such as Shell and Fuelman. After you snag enough of these and have them reporting positive payment history, you can apply for cards in the top tier.

That is the cash credit tier. These are the cards that have higher limits, lower rates, and no exclusions on where you can use them or what you can use them for. If you use these cards responsibly, you will have access to all the funding you need to run and grow your business.

Small Business Credit and Company Loans

As you may have noticed, we didn’t mention biz loans much when talking about small business credit. That is because most traditional lenders are going to check your personal credit history even if you do have strong corporate credit. There is just no way around it. However, if you have strong company credit, it can only help you. It may mean the difference in approval for a $50,000 loan or a $100,000 loan, or 10% interest and 6% interest.

In addition, some non-traditional lenders will actually look at business credit and even report to the business CRAs such as Dun & Bradstreet, Experian, and Equifax.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Monitor Your Credit

This is important all the way through the process. First, you need to know which accounts are reporting to your small business credit. You also need to know how many. That’s how you will know it is time to start applying for cards in the next tier.

The problem is, you cannot get a free copy of your business credit report the same way you can with personal credit. You can purchase a copy of your report from the reporting agencies, but you have to pay each time you want to see what is on your report. At CreditSuite.com/monitoring, we can help you monitor your business credit on an ongoing basis for a fraction of the price. Not only will this help you to know when to move on to the next tier, but it will let you see if there are any mistakes or inaccuracies keeping your score from being the best it can be. If there is something there that shouldn’t be, or something not there that should be, you can get it corrected quickly.

Everything You Need to Know About Small Business Credit and Then Some

Now that you understand more about small business credit, what it is, and why you need it, you are likely to have more questions than just what we’ve covered. Here is one thing you can know without a doubt however. Strong small business credit it vital to running a healthy company. Our free guides, webinars, and dedicated staff are here to help you build and maintain small business credit every step of the way. Your business success and growth depend on it.

The post Top 5 Things You Didn’t Know About Small Business Credit appeared first on Credit Suite.

Unprotected Small Business Start Up Loan For 2008 Ventures

Unsafe Small Business Start Up Loan For 2008 Ventures Beginning a service needs cash. Without begin up resources, really couple of individuals have the sources offered to release an effective service suggestion. An unprotected tiny company begin up funding can minimize a whole lot of anxiety. A company car loan for begin up expenses is …

The Best Small Business Credit Card of 2019 for Any Situation

fwistAnd How to Be Sure You are Eligible for the Best Small Business Credit Card for Your Situation When you start wondering what the best small business credit card is, you may be surprised to find out that answer actually can vary. What may be the best credit card for one business may not necessarily … Continue reading The Best Small Business Credit Card of 2019 for Any Situation

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