Small Business Loan Solutions
Statistics show that 94.7% of all small business owners feel their only financial resources are their local banks or personal credit cards…even though their local banks often require them to pledge their homes and personal land as collateral. .
Here are some tips that can save your business, regardless of your personal credit history.
First, getting approved for a small business loan is definitely easier than getting a personal loan…regardless of your personal credit score. Plus, getting the right types of corporate credit is absolutely critical: if you want to protect your personal assets, minimizing the risk that a personal lawsuit will affect your business and your ability to weather economic changes that occur overnight.
All business owners need to be much more proactive in developing relationships with the right types of lending institutions. Typically, you want to start your application process with out-of-state national lenders…not your local or regional banking institutions. Domestic lenders will generally not require a personal guarantee or your social security number.
I have attached a basic roadmap for you to follow, whether you need a small business start-up loan, business debt consolidation loan, bad credit business loan, or government business loan.
Ultimately, you need to find a competent professional who can help you navigate through the process of building a strong corporate credit score.
Finding a competent business loan expert will give you a leg up on your competition and also allow you to focus on going about your day-to-day activities…rather than dealing with the hassles of establishing a strong business credit score. A great business credit score can help your business image overnight.
You should prepare yourself with these very basic questions before applying for any business credit.
1. How is your business structured? Are you a sole proprietorship, C corporation, S corporation, Limited Liability Corporation (LLC), partnership, or trust?
2. How long has your business been recognized by your state and local government?
3. Has your business ever received derogatory information against you from either of the two (2) most popular commercial credit reporting agencies, Dun & Bradstreet or Experian?
4. Are your business permits, licenses and registrations current?
5. Does your business have a physical address or are you trying to use a US PO Box instead?
6. Does directory assistance recognize your business phone number?
7. Are your incoming phone calls answered professionally on behalf of your company?
8. Have you established a business checking account?
9. Have you registered and applied for an Employer Identification Number (also known as an EIN) from the IRS?
If your answer to the first question was sole proprietorship, partnership, or trust; I urge you to reestablish your business as a corporation or LLC. I’m not going to give you legal advice, but many CPAs and attorneys strongly recommend LLCs (Limited Liability Companies) as a way to protect your personal assets and wealth… should lawsuits be filed against your company.
As a sole proprietor, your personal assets are at direct risk of seizure or confiscation when faced with most types of legal action. Also, if you are applying for business loans in the name of a corporation… most lending institutions will not require you to provide any personal guarantees!
A corporation may still face difficulty applying for business credit, if it has been in business for less than 2 years or has had previous credit problems reported against it. Here are some ways to fix these problems.
– Purchasing a “dormant corporation” or “old corporation” that has been in good standing with your state government (for more than 2 years) can drastically improve your chances of small business loan approval.
– You can try to repair your company’s credit rating by writing dispute letters to Experian or Dun & Bradstreet, which is not always possible.
– Some corporate credit experts will help you find, select and purchase an established “shelf” or “old” corporation, some of which already have strong established credit ratings…saving you a lot of hassle!
I cannot stress this enough… You MUST have a physical address (not a PO Box) if you want to establish a strong business credit rating. The same is said for phone numbers and the way incoming phone calls are handled. Would you lend money to a business that doesn’t appear to have a physical address or documented phone number?
And don’t forget to always keep your small business permits, licenses, and registrations up-to-date…and always keep copies of these documents in case a prospective lender requests this information.
Business checking accounts are a must. Once again, this shows the stability of your prospective lenders. Here are a couple of tips for you, in case a checking account has been closed for you by a financial institution. Pay the outstanding balance (if any) reported by the bank, or open a checking account at a bank or credit union that does not use the ChexSystems credit reporting system. Most credit unions don’t use ChexSystems, and you can always find a list of banks in your area that don’t use ChexSystems…just by doing a Google, Yahoo, or MSN search.
Small business credit scores are tracked using your business name, business address, and employer identification number (EIN). You can apply for and receive an EIN on the IRS website (irs.gov). You can also call the IRS, but be prepared for long waits.
Then you’ll want to get a DUNS number from Dun & Bradstreet, the largest commercial credit reporting agency. You can request it free of charge on the Dun & Bradstreet website and you will usually receive this number within thirty (30) days. Do not request this number until it has been thoroughly prepared, because any information you give them… goes on your credit file… permanently.
Once you’ve gotten your DUNS number, you’re probably ready to start establishing some provider credit. Vendor credit is where many business owners begin to establish business credit scores. Just go to Staples.com, Officemax.com, or Officedepot.com to get started. Then you’ll also need to fax them your business phone bill and credit application…on your business letterhead (which you can create using your favorite word processing software if you don’t have expensive stationery). They typically don’t require any personal collateral (if you’ve followed the scheme above), and you’ll typically receive an initial line of credit of $750.
This is critical and I repeat…critical! Always pay your bills before grace periods begin…especially on unsecured credit cards or lines of credit from vendors. Dun & Bradstreet will lower your credit score for each day a creditor reports your bill as unpaid while you are within your grace period. Whereas, personal credit scores are not lowered unless you are more than 30 days past due.
Dun & Bradstreet reports what is known as a Paydex score (your corporate credit score), and a score of 80 is very good…with 100 being the highest you can achieve. Your Paydex Score is issued once you have established a known provider/credit relationship with at least five (5) creditors.
There are shortcuts that will help you get well over $750 much faster. By using a business credit expert, most small business owners (even start-ups) can get approved for vendor lines of credit of $25,000-$50,000 and open lines of credit of $50,000, $250,000, $500,000 or more. .. in just 45-60 days. ..by using your knowledge of the application process and “shelf” corporations.
Now, it’s your choice. Are you going to go against the grain and try to establish business credit on your own (which could prove costly to the health, growth and survival of your business)? Or will you choose to use a corporate credit expert… to allow you to focus on your day-to-day business needs?
Most business owners make the mistake of trying to do this on their own…usually trying to find grants, “angel” money from investors, or resorting to the “personal credit card sword.” Don’t be a victim like the rest. Learn more about how you can use the tools that informed and educated millionaire entrepreneurs have used for years.
