14. October 2017

If you've taken the time to read the "Small Business Finance" articles in the New York Times, The Wall Street Journal, CNNmoney, or Forbes they are always talking about things like:

  • Planning your IPO for going public
  • Making your pitch to Angel Investors
  • Finding the right Venture Capitalist
  • Creating a business plan that banks will love
  • Attracting more funding to your Series A

While this might be nice titles for their articles, what application do they have to "Small Businesses"? When we are talking about small business we are talking about the bread and butter of America:

  • retails stores
  • hair salons
  • service businesses
  • contractors
  • franchisees
  • auto shops
  • restaurants

None of which are ever going to have an IPO, pitch to angel investors, go after venture capital, or do a series A SEC funding. Come on writers and contributors, let's talk about what small businesses need!

In the wake of the financial collapse of 2008 lending to true small businesses all but disappeared. Banks, Credit Unions, Finance Companies all saw there sources of cash for small business lending dry up and blow away. Now here it is nine years later and small business lending has not returned to where it was. So how does a small business get financing now?

The percentage of small business loan declines is staggering. About 97% of traditional business loan applications get declined. That means you have a 3 in 100 chance of getting approved. That is horrible, but there is a way to greatly improve your odds.

First, you have to know who is lending and what types of loans they are making. For example, banks are fairly aggressive about approving credit cards. Therefore if you have owners or principles in your business that have good personal credit scores then they can each be approved for between $25,000 and $200,000, with the average being around $75,000. This means if you have 3 owners or principles you could be funded $75,000 for each one and have $225,000 available for your business. The upside of these credit cards is that many start out with 0% interest for the first 9 to 12 months.

Next are Credit Unions. They were banned from business lending for 7 years from 2009 through 2016. The banks had no money to lend to small businesses so they pressured congress to make sure that Credit Unions didn't rush in to fill the gap. Credit Unions are now back into small business lending and doing mostly vehicle financing, equipment financing, small term loans, and construction loans. The term loans range from $10,000 to $75,000.

And now for some really useful small business advice. Business Lenders care about the personal credit of the business owners. Your goal should be to have FICO 8 scores that are north of 720, have debt to limit on your revolving accounts at 45% or below. Be able to show a good debt coverage ratio for the amount you are seeking and limit the number of recent inquiries on your credit reports.

If you want an "investor", then create your own. Find a partner with good personal credit scores who is willing to use those scores to get your business approved for financing. It is called a "Credit Partner" and they are much easier to close a deal with than are "Venture Capitalists"! 

Business Loan Approvals, Optimize Personal Credit, Pre-Qualify for Business Loans, Small Business Financing

13. October 2017

You must go about financing your business the right way or you will risk losing every personal asset you own if your business happens to fail. Don’t risk it, do business the right way.

1. Where do I begin?

In order for you to not use your personal social security number and not have to personally guarantee every loan, your business must be setup as an "entity" unto itself. Therefore sole proprietorships or partnerships will not work. With a sole proprietorship or partnership, you are in business, but not "a business". Without a separate “business entity", you personally guarantee every debt that is incurred by your company. Simply stated, if you do not want to personally guarantee your company's debt, make sure that your business is an "entity".

2. I have a Business American Express, am I already started?

No! While your business name might be on the card, do not be fooled, that card will only report when you default and then they will come after "you".

3. What is a "Dun & Bradstreet" (D-U-N-S) number and why do I need one?

A Dun and Bradstreet number, sometimes referred to as a D-U-N-S number or a D&B number, is the number that your business's credit rating is reported under for the Dun and Bradstreet business credit reporting agency.

4. Can I get a "Dun & Bradstreet" (D-U-N-S) number for free?

Dun & Bradstreet says that you must pay them or you will never have their business credit score. However, the first time a creditor requests your business credit file, D&B will create it so that they have something to sell them. 

5. How long will the credit building process take me?

The process is not hard, but you must pay attention to the details. Hopefully, you were very serious about going into business and therefore, you should be very serious about building your business credit too! The process normally takes about six months.

6. I have a new company. What can I do to build business credit? 

You can get business credit cards, corporate leases and take advantage of many vendor financing programs available to your business. 

7. Will I be able to get an SBA Loan when I finish?

Getting an SBA Loan when you have poor personal credit is extremely difficult. Most SBA Loans are being denied even to those individuals with good personal credit. Unfortunately the SBA itself reports that 97% of all business loan applications get declined. There are many other sources that you will be able to take advantage of in order to receive creative financing options to help start or build your business. Your new business credit can be utilized to obtain computers, equipment, company credit cards, lines of credit from wholesalers, etc. 

Build Business Credit, Business Credit Scores, Pre-Qualify for Business Loans, Small Business Financing

12. October 2017

The major mistake that almost all businesses make is co-mingling their personal credit and finances with their business credit and finances.

Let’s take a look a few examples of this:

Example #1

You start your business, you open a business bank account, and from whatever resources you deposit money into that account. BIG MISTAKE!  

Here is the correct way for this to happen. You start your business, you open a business bank account, and from whatever resources you open a certificate of deposit and then use then CD to secure a business loan for the same amount from your bank.

Why do that? First you checked with your bank to see if they will do this transaction, and later we will provide you with a list of banks that do, and then you make sure that your bank will report your new business loan to the business credit reporting agencies.  When your new business loan reports it does not report as secured and it alerts all other potential business lenders that your business was worthy of getting approval for a bank business loan. Your business is now on other business lenders radar.

Example #2

You personally have good credit scores. You believe you can use those scores to secure business financing and in many cases you are correct. But you haven’t taken the time to know if your business is in lender compliance and you just apply. 

Unfortunately you get declined. You got declined because the address you provided was a residential address and you didn’t know that business lender declines all home based businesses.  

By not being ready to apply you have now damaged both your personal credit and business credit scores.

The solution to this is to know that you and your business are truly pre-qualified and ready to apply before you actually apply.

Example #3 

You are operating your business as a sole proprietor or partnership. While these are viable forms of business, you are in business but you are not “a” business.  What this means is that you do not have a business entity and that everything you do in that business comes back to you personally. 

This means any debt or liability the business might have you are now personally liable for which is a major risk for your personal credit and finances.

The solution is to have a separate business legal entity that can be responsible for the business liabilities and which can develop its own credit scores that are separate from you personally.

Unlike your personal credit, which goes with you when you leave your business, your business credit remains attached only to your business.  Your business having its own strong business credit scores creates an asset.  This asset is valuable because it can be transferred to the new owners and is immediately available for their use.

Building strong business credit scores is all about having reporting trade lines that you use regularly and that you pay on time.  To optimize your business credit scores your business will need at least 10 positive reporting trade lines which show a pattern of month in and month out usage with good payment histories. 

Build Business Credit, Business Credit Scores, Vendor Credit Lines

11. October 2017

Is your business bankable? In order answer that question, you first need to know what the term bankable means. 

Think of becoming bankable as completing four legs of an unfinished table. Your business is bankable when the four legs of the table are complete.

Leg one is completing all Lender Compliance Items. These are a series of 20 items that the lender’s computer will check to see if your business has completed.

Leg two is acquiring business credit trade lines. Your business credit reports must show at least 10 reporting trade lines. These are accounts you have with vendors or lenders that report how your business pays its’ bills. Just like trade lines on your personal credit reports, business credit trade lines report every single month if you pay early, on-time, or late. 

Leg three is having strong business credit scores. Your business must have credit scores of 70 or above to be considered strong. To a lender, the higher your scores, the more likely you are to pay on time.

Leg four is having a good business bank rating. Banks assign every business a rating based on the average daily account balance of their business bank account. This indicates the businesses ability to their bills. Your goal is to maintain at least a Low 5 Bank Rating.

Now that we know the requirements for becoming bankable, how do you know where your business stands? Is your business bankable? If not, what can you do about it?

This is where our free Bankable Business Assessment comes in. By completing the short assessment you will learn where your business stands in the process of becoming bankable. Even better, you will learn exactly what steps are left to be completed.

Becoming bankable is easy, but it is not an overnight process. If you are serious about building a successful business, then get your free assessment today.

Build Business Credit, Business Credit Scores, Lender Compliance Items, Pre-Qualify for Business Loans, Small Business Financing

10. October 2017

As a referral agent your success is measured by the amount of commissions you're able to generate. One of the largest sources available is currently being thrown away by others. 

Let's use an example of four trash bins. The first bin is for true waste, the second compost items, third paper, and the fourth plastics and metal.

We all know that if no one monitors who throws what into each bin, then eventually the waste bin just overflows with unsorted trash. But, if we add an assistant to the sorting process, then all the bins are filled properly.

Business leads are the same. There are tens of thousands of businesses spending money each month to generate leads, but if those leads don't convert to clients then the leads end in the waste bin and generate nothing. For most companies this is 99 out of every 100 leads. 

This is very true of business lenders, finance brokers, business brokers, credit unions, merchant processors, credit card providers, and vendors who extend credit terms. If their leads don't pre-qualify or become a client, then off they go into the waste bin, unsorted with zero value.

Enter you, the ultimate Recycling hero. Instead of throwing those valuable leads away, you can help sort them by placing them into the system, possibly generating even more money.

You become the assistant who turns other's trash into significant cash. You're even more the hero because none of those leads feels like they were thrown away. They never again hear "You're Declined".

Instead, you've placed them on a path to not only pre-qualify, but also to return to where you found them, converted into a valuable client.     

As a Referral Agent, Fundability will provide you with thousands of prospects who are currently throwing their leads in the trash, unsorted. We also provide the resources to find tens of thousands of businesses who have already experienced being thrown away and never want to go through that again.

Be a hero, become a referral agent today! 

Build Business Credit, Business Loan Approvals, Pre-Qualify for Business Loans, Small Business Financing