Business Loans for All Credit Scores

by: Lee Kendrick

Where is the best place to borrow money? What kind of loan terms will I qualify for? Will my loan be denied? What can I do to enhance my chances for loan approval?

These are some of the most common questions that most business owners have asked me over the years. The worst part is that more than 98% of these same business owners told me they felt their only resources were their local banks or credit cards (secured with personal guarantees). And, most of their local banks even required them to pledge their personal homes & land as collateral.

Like most of these business owners, you've probably already gotten to the point... where you need money FAST! So, here's some common sense advice that can save your business, regardless of your personal credit history.

First of all, getting approved for a small business loan is definitely easier than getting personal loans... regardless of your personal credit scores. Additionally, getting the right types of corporate credit is absolutely critical: if you want to protect your personal assets, minimize the risk of a personal lawsuit affecting your business, and to your ability to weather the economic changes that happen overnight.

All business owners must be much more proactive about developing relationships with the right types of lending institutions. You usually want to start your application process with out-of-state, national lenders... not your local or regional banking institutions. National lenders typically won't require a personal guarantee or your social security number.

I've attached a basic roadmap you'll need to follow, if you need a small business startup loan, a business debt consolidation loan, a bad credit business loan, or a government business loan.

Ultimately, you need to find a competent professional that can help you navigate through the process of building a strong corporate credit rating.

Finding a competent business loan expert will give you a head start on your competition & also let you focus on running your day-to-day activities... instead of dealing with the hassles of establishing a strong business credit rating. An excellent business credit score can help your company's image, overnight.

You need to be able to answer all of these very basic questions, before you apply for any business credit.

1. How is your business structured? Is it 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 & Local government?

3. Has your company ever had derogatory information reported against it to either of the two (2) most popular business credit reporting agencies, Dun & Bradstreet or Experian?

4. Are your company permits, licenses and registrations current?

5. Does your business have a physical address, or are you trying to use a U.S. Post Office Box instead?

6. Is your business telephone number recognized by directory assistance?

7. Are your incoming telephone calls professionally answered in your business name?

8. Have you established a business checking account?

9. Have you registered & asked for an Employer Identification Number (also known as an EIN) from the IRS?

If your answer to the first question was a sole proprietorship, partnership or trust; I urge you to re-establish your company as a corporation or LLC. I'm not going to provide you with legal advice, but many CPAs and attorneys highly recommend LLCs (Limited Liability Corporations) as a way of protecting your personal assets & estate... in the event of any lawsuits being filed against your company.

As a sole proprietor, your personal assets are at direct risk of seizure or forfeiture when faced with most types of legal action. Additionally, if you are applying for business loans in a corporation's name... most lending institutions will not require you to provide any personal guarantee!

A corporation can still face difficulties applying for business credit, if it has been in business less than 2 years or had previous credit problems reported against it. Here are some ways to fix these problems.

- Purchasing a "shelf corporation" or "aged corporation" that's been in good standing with your State government (for longer than 2 years) can drastically improve your chances for small business loan approval.

- You can attempt to repair your business credit rating by writing dispute letters to Experian or Dun & Bradstreet, which isn't always possible.

- Some corporate credit experts will help you find, select & purchase an established "shelf" or "aged" corporation, some of which already have strong credit ratings established... saving you alot of hassles!

I cannot stress this enough... you MUST have a physical address (not a PO Box) if you want to establish a solid business credit rating. The same thing is said for telephone numbers & the way incoming phone calls are handled. Would you lend money to a company that does not appear to have a physical address or documented telephone number?

And, don't forget to always keep your small business permits, licenses & registrations current... and always keep copies of these documents in case a potential lender asks for this information.

Business checking accounts are a must. Again, this proves stability to your potential lenders. Here are a couple of tips for you, in case you've had any checking accounts closed by a financial institution. Pay off the outstanding balance (if any) that's being reported by the bank, or open a checking account at a bank or credit union that doesn't use the ChexSystems credit reporting system. Most credit unions don't use ChexSystems, and you can always find a list of banking institutions in your area that don't use ChexSystems... by simply doing a search on Google, Yahoo or MSN.

Small business credit ratings are tracked using your business name, business address and employer identification number (EIN). You can apply for & receive an EIN at the IRS's website (irs.gov). You can also call the IRS, but be prepared for long waits.

Then you'll want to obtain a D-U-N-S number from Dun & Bradstreet, the largest business credit reporting agency. You can apply for this without any fees at Dun & Bradstreet's website (dnb.com), and you'll usually receive this number within thirty (30) days. Do not apply for this number until you've prepared your self thoroughly, because any information you give to them... goes into your credit file... permanently.

After you've obtained your D-U-N-S number, you're probably ready to start establishing some vendor credit. Vendor credit is where many business owners start establishing business credit ratings. Then, you'll also need to fax your business telephone bill & the credit application to them... on your business letterhead (which you can create using your favorite word processing software if you don't have expensive stationery). They usually don't require any personal guarantees (if you've followed the outline above), and you'll usually receive a starting credit line of $750.

This is critical & I repeat... critical! Always pay your invoices before the grace periods begin... especially on unsecured credit cards or vendor credit lines. Dun & Bradstreet will lower your credit score for every day a creditor reports your bill as unpaid while you're within your grace period. Whereas, personal credit scores are not lowered unless you are 30+ days past your due date.

Dun & Bradstreet reports what's known as a Paydex score (your corporate credit score), and a score of 80 is very good... with 100 being the highest score you can achieve. Your Paydex score is issued once you've established a known vendor/credit relationship with at least five (5) creditors.

There are shortcuts that will help you get much more than $750 alot faster. When using a business credit expert, most small business owners (even startups) can be approved for vendor credit lines of $25,000-$50,000 and open credit lines of $50,000, $250,000, $500,000 or more... in as little as 45-60 days... by using their knowledge of the application process & "shelf" corporations.

Now, it's your choice. Are you going to go against the grain & try to establish business credit on your own (which could prove costly to your business health, growth & survival)? Or, will you choose to utilize a corporate credit expert... allowing you to remain focused on your daily business needs?

Most business owners make the mistake of trying to do this on their own... usually trying to find grants, investor "angel" money, or falling back onto the "personal credit card sword". Don't be a casualty like the rest. Learn more about how you can use the tools that informed, educated millionaire businessmen have used for years.

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