While bad credit business loans are a viable option they do come with a price that most are not willing to pay. It can also be a difficult task but it is definitely possible despite the current economic times.  

Before you decide this is an option you’re willing to pursue I encourage you to do your homework and don’t jump into anything without carefully weighing all your options on the table.

Below I have listed several ways to obtain a business loan if you have bad credit but be prepared to pay higher fees and higher interest rates with some of them.

Sub-prime lenders

While there is sub-prime lending programs designed for business owners with bad credit, these specific programs charge anywhere from 12% to 18% interest, and even higher. This is not an option I would recommend because you end up weakening your finances in the long term.

Transfer of Ownership

One of the ways you can solve a bad credit problem is through a transfer of ownership. In many cases two partners in a corporation own 50% each and one partner may have excellent credit while the other may have bad credit. In these cases both will have to be included in the credit check for a business loan with the bank and the one partner with bad credit will ruin the chances of obtaining a loan for the business.
If this is the case than an option would be to transfer 100% of the business to the partner with the strong personal credit profile. The transfer of ownership is done privately and is simple to complete and can easily be filed in your corporate record keeping book. Make sure you consult with your CPA and attorney if this is something you would like to do. Remember, the ownership can be transferred right back once you have finished applying for a business loan with your bank.

Secured Business Loan

A sure way to obtain a loan with bad credit is to post sufficient collateral. This type of loan is known as a secured business loan and is typically asset-based, which means hard assets are used like equipment, commercial real estate, receivables and in some cases inventory.

Co-Signer

This happens to be a very common solution for bad credit business loans. A creditworthy co-signer will act as a guarantor for the business loan and they can be a business or trading partner, or investor, or subsidiary company with a strong credit score.

As you can see a business loan with bad personal credit is possible even during these challenging times. As you work on repairing your personal credit these options can be a temporary solution for your business to obtain the funding it needs. While bad credit business loans are costly you have to ultimately decide if it’s a price your willing to pay.

To Your Success!

Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below=>

I have assembled my ‘Top 10 Credit Reporting Agencies Every Business Owner Should Know’ in order to full educate the entrepreneur and small business community on what’s available in the marketplace to grow and maintain their credit files.

 
While the majority of consumers are fully aware of the three main consumer credit reporting agencies known as Equifax, Transunion, and Experian there are a few that realize that there are six other separate business credit reporting agencies that specifically collect data on businesses. 

The tenth reporting agency is extremely important as it has to do with you’re ability to open up a checking account with a financial institution. Banks use a reporting agency known as ChexSystems which is a network comprised of member Financial Institutions that regularly contribute information on mishandled checking and savings accounts to a central location.

Here are a few examples of the difference between a personal credit rating and business credit rating.

A personal credit score is based only on credit history whereas a credit rating for a business takes into consideration other factors like company size as determined by assets and number of employees.

Also a personal credit score is based on financial information provided by credit card companies, retail stores, and financial institutions whereas a business credit report and rating is determined by information supplied by the business owner and gathered from vendors, suppliers, and other trade accounts.

For this reason, potential lenders may be different from one another in their evaluation of a business’ credit history by emphasizing certain qualifications more than others.

Here are the Top Business Credit Reporting Agencies Every Entrepreneur Should Know About

Dun and Bradstreet (D&B)

D&B is the primary business credit reporting agency. For years, D&B has offered a variety of ratings tools that can be used to determine whether to engage in business with a particular company and to determine loan terms. The most commonly used business credit score for vendors to determine a businesses’ credit worthiness is based off of D&B’s Paydex score.

 
Equifax Small Business Enterprise

Equifax, one of the three primary consumer credit rating agencies, also provides business credit evaluations for over 22,000,000 small businesses and corporations. Equifax has developed its own business credit score known as the Small Business Credit Risk Score^TM. This evaluation is based on a combination of reported financial transactions, including banking, leases, trade accounts, public records, as well as the demographics of the business. The Financial Services Credit Risk Score^TM assigns a score from 101-992 with the highest score indicating the lowest risk of delinquency and the lowest score indicating the highest risk of delinquency. The Suppliers Credit Risk Score^TM assigns a score from 101-816 with the highest score indicating the lowest risk of delinquency and the lowest score indicating the highest risk of delinquency. These scores also include explanations of why a particular business earned that score based on a series of reason codes provided in the report.

 
Experian SmartBusinessReports^TM

Experian is another one of the three primary consumer credit rating agencies who provides business credit evaluations. Unlike D&B and Equifax, Experian’s SmartBusinessReports^TM doesn’t assign a business credit score. Given this information, it would be up to the lender to interpret the risk associated with this type of payment history.

 
Credit.net

Credit.net is a division of InfoUSA® that generates credit reports on approximately 15,000,000 businesses. There are 6,000,000 of the reports in their database that have been completed on small businesses with four employees or less. The credit analysis provided by Credit.net relies on four criteria: years in business, number of employees, public records, and stability within the industry. Its business credit score is a grading system from A through C (70-100) and is awarded as an evaluation of the company’s credit history.

 
Accurint^TMBusiness

This is a new business that is a combination of forces between The Better Business Bureau (BBB) and LexisNexis, one of the leading providers of business services and information. AccurintRBusiness is like Experian in that they provide public and business profile information, including credit history based on payment patterns of small, medium, and large companies. This company provides a payment history only with no type of unique business credit scoring system.

 
ClientChecker

This is a credit reporting bureau that started in 2003 and specifically targets small businesses, freelance professionals, and contractors seeking information to help them determine which other businesses they should do business with. Rather than providing a fixed business credit score, ClientChecker compiles information based on feedback from its members.

*Another business credit reporting agency worth mentioning is Paynet

Paynet is the premier provider of risk management tools and market insight to the commercial credit industry, collecting real-time loan information from more than 200 leading U.S. lenders.

The company’s proprietary database is the richest and largest collection of commercial loans and leases, consisting of more than 14 million current and historic contracts worth $645 billion.

These business credit reporting agencies allow a business to establish its own credit profile, scores, and payment history. The challenge for entrepreneurs and small business owners is realizing that a business credit file will not be established unless the file is initially set up and activated by the business owner.

I encourage all entrepreneurs and small business owners to separate your personal credit from your business credit and position your business for unlimited financing potential.

Remember – The direction in which education starts a man will determine his future life. ~ Plato

To Your Success!

Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below =&gt

Let me be the first to tell you that businesses are still getting cash credit and business financing today but lenders have adopted new criteria and stricter guidelines that many business owners fail to recognize or adapt to.

It’s more important now than ever to be pro active and informed on what is required to obtain business financing for your business. I don’t recommend anyone to wait until you need financing to start because the business credit building process takes time and doesn’t happen overnight.

Ever heard the phrase ‘Dig your well before you get thirsty?’

I’ll even give you the shovel!

Fair enough?

Great!

It’s important to understand that the biggest benefit to building business credit is not just having access to cash credit. One of the greater benefits is obtaining cash credit that does not report to your personal credit profiles. However, before any business credit building  begins you’re business must meet certain corporate conformity guidelines in order to prevent it from getting red flagged by the business credit bureas.

When you start building business credit and progress in the process by establishing trade credit and eventually cash credit it’s important for you to understand that is not the end result that you should be shooting for. After building your business credit foundation the cash credit that you obtain should only be just the beginning!

You can be assured that you will obtain as much cash credit for your current needs when you follow the right steps but whether your business obtains $50,000 or $200,000, if you continue to follow the right step-by-step process you will be able to increase your cash credit lines to double or even triple the initial amount.

‘Eight Steps to Building Ultimate Business Credit’

1. Corporate Conformity

This is where you’re business credit foundation is set up and it’s critical not to take short cuts or side steps because you’re ability to obtain financing can be hampered. At this stage it’s vitally important to structure your business entity properly from both a tax and asset protection standpoint. In additon, both the business credit bureaus and lending institutions will verify certain information about your business that must meet specific lending guidelines. In order to achieve the best business classification ratings make sure you meet all the requirements before moving on to the next step in the business credit building process.

2. Business Plan

This is not a mandatory step, but it’s necessary for your overall business success as well as a door opener for specific lenders. 

3. Business Credit Profile

Once you have completed corporate conformity you will be ready to set up your business credit profile with Dun & Bradstreet as well as steps to activate your business credit profile with Corporate Experian and Business Equifax.

4. Tier 1 Trade Accounts

This is the first step where you will be setting up trade accounts for your business that are known to grant small amounts of credit to businesses that have no credit history.

*Please note -

Even if you have been in business for several years doesn’t mean you have business credit history. After setting up your business credit profile there will be no history so you will need to start small and gradually build it to larger amounts over time.

5. Tier 2 Trade Accounts

At this point you set up business trade accounts for your business that are known to grant credit to businesses that have little business credit history. Because most Tier 1 accounts will now be reporting on your business credit profile you can now apply for Tier 2. When Tier 2 vendors pull your business credit report they will see that you have some good history so they will grant additional credit in amounts higher then approved for in Tier 1.

6. Tier 3 Trade Accounts

These companies will grant credit in higher amounts than what was granted from Tier 1 and Tier 2 accounts. Those members with good personal credit history may also be ready for bank financing at this stage. Each tier builds upon the previous tier. Many of my clients who want to apply for bank financing at this stage can but at this stage they will need to use their personal credit scores for approval and will need to be in the 680+ range. If personal credit scores are below the necessary range then I suggest enrolling in a credit restoration program.

7. Tier 4 Cash Credit Accounts

Tier 4 accounts consist of vendors who will grant your business cash credit cards, typically with a Visa or MasterCard logo. Benefits to you include no personal guarantee and affect on your personal credit profiles.

8. Advanced Business Financing

At this stage of the process your business credit file is built, you have history, business scores, rating; access to funding and you can continue to obtain even larger amounts of financing by following my advanced business credit building strategies. There are many different advanced strategies to obtain additional capital with and without a personal guarantee at this stage.

Remember it’s not only about how much cash credit you obtain initially, it’s about setting up yourself for much larger amounts of capital for your business. This is accomplished by following a proven simple step-by-step process to building ‘Ultimate Business Credit!’

Remember – “People only see what they are prepared to see.” ~ Ralph Waldo Emerson

Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below =>

I felt that by sharing some insight with you on shelf corporations and what are the key business credit building advantages will better prepare you in making a more educated decision if this is an option you’re thinking about.

Now, let’s first cover the basics.

What is a shelf corporation?

A “Shelf Corporation, also known as an “Aged Corporation” (or “Aged Company” when referring to an LLC, for example) is a corporation that is already formed, but not in use, and ready for “purchase” by a new owner. There are many reasons that people purchase shelf corporations, and there are certain things to look out for when considering one of these “ready-made” corporations which I will cover shortly.

Now one of the questions I’m sure you’re thinking is “Why should I purchase a Shelf Corporation?”

Shelf corporations allow you to engage into business, credit, or real estate agreements as an established company without having to go through the long waiting period of establishing a brand new corporation.

Most potential creditors or business resources are less likely to extend credit or lend to new or up-start corporations. By approaching them as an established corporation or company, the more likely your business has the chances of more access to credit lines, banking relationships, leases, and so on.

For example, during the initial stages of building business credit there are some vendors that will only extend credit to companies that are at least 2 years in business. In some cases they also require a personal guarantee if the business is less than a year old. By purchasing a shelf corporation that’s three or even ten years old can drastically increase the number of credit opportunities available to you.

Now don’t worry if your existing corporation is less than 2 years old because you’ll still be able to obtain business credit, but the amount of banks that you can apply at will be limited. If you’re planning on starting a corporation or setting up another corporation then this may be an option to entertain.

Shelf corporations can also offer a large increase in borrowing power as well as enhanced credibility for your business when talking to customers and lenders.

Remember the age of the owners does not necessarily correspond with the age of the company.

When the H.J. Heinz Company advertises that it was established in 1869, it doesn’t mean that all of the shareholders are well over 100 years old. It simply means that the company was filed in that year. You can take advantage of similar credibility benefits when advertising to customers.

The age of your company can give greater credibility to customers and lenders than a business that was recently established. So, purchasing companies with established credit and existing credit lines can give the business a big financial boost.

Here are the Top 5 Advantages of a Shelf Corporation

1. Saving time and expense of forming a brand new corporation

2. Instant access to contract and government contract bidding. Most states require that your company be in business for a specified minimum length of time.

3. Instant credibility and an appearance of corporate history.

4. More attractive to potential investors and investment capital.

5. Faster and easier access to banking relationships and lines of credit.

If you currently have a shelf corporation then you can use it to obtain credit card funding. As far as purchasing a shelf corporation, given the current credit crunch, banks want to see more than even being a 2 year old corporation. So if your only interest is in applying for bank financing keep in mind Shelf Corporations have no business history, tax returns, financials and existing revenue.

Caution!

There are many companies that sell shelf corporations that have done business in the past, DO NOT buy these! If a shelf corporation has done business in the past and you purchase it you also assume all past liabilities of that company. So if the company has had any lawsuits brought against the corporation from the past you are now liable because you now own the corporation.

It’s critically important that the shelf corporation you are considering not have any inherent or lingering liabilities. For the most part, this can be assured by looking into the history of the corporation and ensuring that the extent of its business activities were limited or non existent except for the application of an Employer Identification Number and maybe the formation of a bank account.

Shelf corporations can be a great option if the proper due diligence is taken and there are many aged shelf Nevada corporations, Delaware corporations, Wyoming corporations, offshore corporations and Canadian Corporations that are available but be sure you do your homework.

Are you considering a shelf corporation?

 P.S If you are interested in a LLC Shelf corporation that’s 1-2 years old let me know and I would be happy to help you. I have several Nevada LLC’s with Wells Fargo bank history. Email ceo@startbusinesscredit.com if you’re interested.

Remember – “Formal education will make you a living; self-education will make you a fortune.” ~ Jim Rohn

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below To Your Success! =>

Recently I shared the benefits of building business credit with each of the business credit agencies. Separation of personal and business credit is a must for small business owners in order to eliminate personal liability and protect the integrity of the corporate veil.

While this strategy creates a Paydex, Small Business Credit Risk Score, and Intelliscore for your business it’s not the only rating you should pay close attention to.

Your business will also need to establish effective ‘Bank Credit’.

Bank credit is totally separate from building business credit and in no way affects your ability to build strong business credit scores.

“Bank Credit” makes your business more credible in the eyes of lenders.  In this post, I want to share with you the ‘3 Main Components of Building Bank Credit’ which are:

• Business Bank Account & History
• Bank Rating Number
• Obtaining Your First Business Bank Loan

So let’s get started!

Business Bank Account

The first step in establishing positive bank credit is to make sure that your business name and mailing address, as listed on your business bank account, matches exactly how your business name and address appear on any legal paperwork that’s been filed with the State. It must also match exactly with the name and address that appear on your Federal EIN paperwork. If it doesn’t match you’ll have to correct it immediately!

Business Bank History

Most lenders also determine the age of your business by the date you first opened your business bank account and not the date that appears on your Incorporation, LLC, or EIN paperwork.  However, in some instances banks may also require 24 months seasoning from the start date of your business as well.

Your business banking history is vital to your ability of being able to secure larger business loans with banks. Lenders will look to see how long that relationship has been established, so once you get your account set-up don’t change banks!

The longer your business banking history, the better the borrowing potential you have.

Bank Rating Number

 Your business bank account reflects how you manage your cash flow. Lenders want to know that your business cash flow is capable of handling the business debt and expenses on a consistent basis. Bank accounts with low average daily balances, or that show many NSF returned checks, can get your business loan applications declined right away.

If a loan amount requires a $1,000 month payments then lenders need to see at least a “Low 5″ bank rating. Your “Bank Rating” is based on your average daily minimum balance over the last 3 months.

1.  The first factor is your balance rating. This rating is your average minimum balance maintained in your account over a three (3) month period. $10,000 will rate as “Low 5″, $5,000 rates as “Mid 4″, $999 rates as “High 3″, and so on.  You need to maintain a minimum “Low 5” bank rating ($10,000) for at least 3 months. Unfortunately, without at least a “low 5″ rating, most lenders will assume your business has little ability to repay.

2.  The second factor is the bank rating cycle which is three (3) months. You’ll want to have at least a low 5 for the three months prior to applying for larger loans.

3.  The third and final factor has to do with how you manage the account.  NSF (bounced) checks destroy bank ratings.  From this point forward, NSF checks are something you can’t let happen. I would suggest that you add overdraft protection to your account as soon as possible.

Obtaining Your First Business Bank Loan

Getting your first business loan from a bank can seem like an impossible task. The majority of the business loan applications at banks get declined because banks won’t lend to just anybody … or will they?

This one business bank loan strategy provides a powerful boost to building business credit fast. The business bank loan needs to be in the exact name of your company. It should be under your Federal EIN and report to the business credit agencies, specifically Equifax Small Business and Corporate Experian.*

So how do you accomplish this? Under this Bank Loan Program you will be securing a business loan with a certificate of deposit (CD) at the bank that is extending the business loan.  You’ll make a deposit into a CD account at an SBA preferred lending bank. Then, you receive a business loan for 100% of the value of the CD.

This process works very well and works every time as long as you’re personal credit scores are not in the low 500 range. If your scores are in the low 500’s, it’s best to try smaller business banks and talk to an individual banker first.

The Benefits of a Secured Bank Loan

• It will appear on your business credit report just like any other loan.
• There will be no note in the file, or on credit reports, that show it as “secured”.
• It will make your business credit report stand out to other lenders and creditors who obviously know how difficult it is to get a business bank loan.

If you’re personal credit is a large issue and you just can’t find a business bank to do the CD program for you … don’t worry. You can still build your business credit without the bank loan; the bank loan just makes it faster. 

 *N.E.C. members are provided access to our list of banks who have done the CD-Secured Business Loan program

Remember – The secret of business is to know something that nobody else knows. ~ Aristotle Onassis

Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below =>

A business line of credit is typically revolving like a credit card and it has no fixed payment terms and is based on an adjustable market based interest rate. Some have a feature of only requiring monthly interest only payments to be made in order to keep the payments small while your business grows. In most cases you can elect to make the full monthly payment of both the principle and interest when you want to and can pay the full balance at any time without penalty prior to the maturity date.

The amount your business is able to receive from a business line of credit will depend on your business past gross annual revenues and projected annual cash flow.

HOT Tip: Most banks will not require business tax returns and profit and loss statements when you keep your credit line of request below $50k. 

A good test to see if your business will qualify is to examine your business bank rating to determine if there has been a sufficient average daily balance to adequately support the line of credit repayment. Typically a low 5 bank rating can grant you an approval so be sure to establish a good rating prior to applying.

Here’s what you need to apply for a business line of credit

Business Information

•Business name

•Business address (physical address, no P.O. Boxes)

•Business phone number

•Business fax number

•Business Taxpayer Identification Number(s) (TIN) or Social Security Number(s) (SSN)

•Business Duns Number

•Date the business was established

•Ownership type

•Number of owners

•Gross Annual revenue or sales

•Business banking account number(s) and balance(s)

Business Owner Information

•Name

•Home address

•Home phone number

•Social Security Number(s)

•Country of Citizenship if not United States

•Date of Birth

•Percentage of ownership

•Annual household income

•Personal savings and/or checking account number(s) and balance(s)

Contact Information

•Primary contact (must be an owner of the business)

•Primary contact phone number

•Primary contact email address 

One of my preferred banks for business lines of credit is Wells Fargo.

Other banks for business lines of credit that I recommend are:

Capital One

PNC

US Bank

For a complete list of our preferred lenders join my business credit community today!

Remember – Abundance is not something we acquire. It is something we tune into. ~ Wayne Dyer

To Your Success!

Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of http://www.startbusinesscredit.com . Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE business credit seminar ($597 Value), available by simply submitting your email below =>

Submit Your Email and Receive ‘8 Steps to Building Ultimate Business Credit’ audio FREE ($597 Value)

Not every entrepreneur who starts and runs an online or offline business begins with a business plan, but it definitely helps to have one. If you’re seeking funding from a venture capitalist, angel investor or other source of private capital then you will definitely need a comprehensive business plan that is well thought out and shows sound business reasoning.
However, too many entrepreneurs believe that business plans are only needed when you require business capital or financing to launch your business. When it comes to the internet many entrepreneurs can start their business on a shoe string budget so in their minds ‘business plans’ don’t apply to them right?

WRONG!

Nothing can be further from the truth. It’s like building a home without using any plans or blueprint. Imagine believing that because you have all the materials, laborers, and tools needed to build a home you figure why do we need the plans? Let’s just start building away!

A business plan is your blueprint that outlines every necessary component for the success of your business. Now for internet entrepreneurs how can you expect to build your business online without a plan? If you plan to build your business on the internet using social media marketing you’re going to need a plan?

You’ve probably heard me say this ‘A sign of no business plan is a sign of no business’.

Still not convinced?

If you ever decide to approach a banker for a loan for your business, your loan officer may suggest a Small Business Administration (SBA) loan, which will require a business plan. If you have an existing business and you are approaching a bank for capital to expand the business, they may not require a business plan, but it will look much more favorably on your application if you do have one.

Here are ‘10 Reasons Why You Should Have a Business Plan’ 

1. Supports a loan application
2. To raise equity funding
3. Define objectives and describe programs to achieve those objectives
4. Compete in the marketplace (through an analysis of what your competition lacks)
5. Make money from the start by devising an effective marketing strategy
6. Provide a revenue estimate (by defining your market — who your customers will be — and the percentage of the market you can expect to reach)
7. Define agreements between partners
8. Set a value on a business for sale or legal purposes
9. Evaluate a new product line, promotion, or expansion
10. Determine whether your business has a chance of making a good profit

What’s in a business plan?

A business plan should prove that your business will generate enough money to cover your expenses, but a business plan may vary depending upon who your target audience is. If you are writing a plan for your associates and partners, for example, to expand an existing business, then the focus of that plan may be more on the operation side than it will be on the financial side. This plan would show your partners how the expansion will mean more revenues, but they are going to want to know the nuts and bolts of how this new venture is going to be implemented.

If you are writing a business plan for a bank, your bank manager will want to see that your ideas are well thought out, but the most important aspect to him or her will be your financials. Are your projections realistic? And will the cash flow of the business be enough to ensure that you can make the monthly payments for the loan that you have requested? If your business is making $1,000 a month and your payments are $1,200 a month, the bank is likely to reject your application.

When considering an investment opportunity, most venture capitalists will look at the obvious trends and market niches. The most important factor in a decision to invest in a company is the quality of the people. In real estate, the three biggest factors are “location, location and location.” The venture capital factors are “people, people and people.” VCs will ask, how experienced are the people that are going to run this business? Do they have knowledge of the industry? Have they started successful businesses in the past?

I know it’s quite a bit to digest but are you seeing all the benefits to having a business plan?

Excellent!

What makes a successful business plan?

Presents a well thought out idea
Contains clear and concise writing
Has a clear and logical structure
Illustrates management’s ability to make the business a success
Shows profitability

Lets bring it all together…

Your business plan is your business blueprint and like a calling card, it will get you in the door when you’ll have to convince investors and loan officers that you can put your plan into action. You want your calling card to look impressive, so make sure your business plan is printed out on good quality paper, you have checked the spelling and grammar and that your numbers add up. Anyone who sees errors while reading your plan will wonder whether you are going to make similar errors in running your business.

A great business plan accomplishes two main objectives:

1) It provides you a blueprint for building your business including but not limited to product development, target marketing, operations, and revenue projections

2) Show bankers, venture capitalists, and angel investors that you are worthy of financial support.

Make sure that your plan is clear, focused and realistic. Then show them that you have the tools, talent and team to make it happen.

Start your business plan today!

CLICK HERE for 500 sample business plans

Here’s a free video course on ‘How to Write A Business Plan’ from the SBA

Remember – We all have dreams. But in order to make dreams come into reality, it takes an awful lot of determination, dedication, self-discipline, and effort. ~ Jesse Owens

To Your Success!

Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, social media marketing coach, author, speaker, and founder of the National Entrepreneur Club. Visit his blog and signup free to get strategies, resources, and response-boosting tips with blog updates, news, and more! Go to http://www.marcocarbajo.com. To start building your business credit and social media strategy today Click Here.

When lending small amounts of money under $50,000 typically the qualification depends solely on personal and business credit scores. Depending on the personal and business credit scores, they either will or will not approve the loan.

When deciding to extend credit to a business lenders use the ‘Four Factors for Lending Approval’:

Capacity

Collateral

Conditions

Character

Each of these areas helps the lender to determine the overall risk of the loan. While each of the C’s is reviewed, none of them on their own will prevent or guarantee access to financing. There are really no automatic formulas or guaranteed percentages that are used with the Five C’s. They are only a variety of factors lenders use to evaluate and decide how much of a risk the potential borrower is.

Let’s cover these 4 Factors in greater detail.

Capacity

This is an evaluation of your ability to repay the loan. Capacity is evaluated by several components including cash flow, payment history, and additional cash sources. The best way to show your capacity is with a strong business credit profile, a strong bank rating (typically a low 5), a well designed business plan and/or prior year(s) financials that show you can produce enough cash to repay the loan. 

If your loan is under $50k most banks will grant an approval if you have a strong business credit rating, a favorable personal credit score, and a low 5 bank rating.

CLICK HERE for a free business plan course 

Collateral 

Heavy machinery, inventory, equipment, stocks and bonds, and other expensive business assets that can be sold if a borrower fails to repay the loan are considered collateral. One of the easiest ways to obtain a business loan for building business credit and bank credit is using the CD-Secured loan strategy.

*There are specific banks that do these types of loans that can allow you to grow your access to capital at a much faster rate.

Conditions

Be prepared to prove that the conditions are right for your business. Make sure there’s a market, an industry, positioning, competitiveness, and experience to back up your plan.

Character

Lenders have to believe that a business owner is a reliable individual who can be depended on to repay the loan. Some areas they look into include personal credit history, education, and work experience.

When applying for a small business loan, don’t forget the importance of personal relationships. Apply for a loan at a bank where you already have a positive business relationship. Also, make an attempt to meet with the person who will be evaluating your application, such as a bank’s lending officer, rather than the teller who handles your day-to-day banking transactions.

If you want to succeed in getting a loan, be sure to also check out Elements of a Successful Small Business Loan Application.

*Gain access to my private list of banks that do CD-Secured loans when you join our business credit community.

Remember – To succeed in business, to reach the top, an individual must know all it is possible to know about that business. ~ J. Paul Getty

To Your Success!

 Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club.  Click here to visit his blog and signup free to get strategies, resources, and response-boosting tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.

While small business credit card usage is on the rise according to the 2009 Small Business Credit Card Survey the majority of all small business owners fail to understand the importance of what’s in the fine print.

Statistics even show that over 65% off all small businesses use credit cards on a regular basis; but the problem is less than half of those credit cards are actually in the business name.

I hope to provide you with some insight into business credit cards and what you should pay close attention to when applying.

First, you should be aware that there are over 500 business credit cards available in the marketplace but less than 70 report your payment history to the business credit bureaus.

In addition, there are less than 40 business credit cards that will extend cash credit cards to your business without a personal guarantee.

Here are my ‘Top 4 Types of Business Credit Card Applications’ you should know about

The Business Credit Card Wannabe

This business credit card is by far the worst and in my opinion very misleading. It doesn’t matter how much fluff or creative sales copy is used by these particular companies what matters is what’ in the fine print! In a nutshell this business credit card application is nothing more than a glorified personal credit card.

How to identify?

The application requires your personal information, social security number, and business name only.  No Tax ID# or Duns# is required.

Disadvantages

Personally liable for all debt

All charges and debts are reported on personal credit files

Impacts personal debt to credit limit ratios

The Business Credit Card Poser

This business credit card is doing its best to be a true business credit card but it doesn’t quite make the grade. In a nutshell this card still requires a personal guarantee but what makes it appealing is the payment history and credit card balance are solely reported to the businesses credit reports not personal.

How to identify?

The application requires your business information, Fed Tax ID#, Duns#, personal information and social security number.

Disadvantages

Personally liable for all debt if the business defaults

The True Business Credit Card

This is the real deal business credit card and what truly represents what every business owner should have. A card that is tied to the business and completely separate from personal credit. This card is the best of both worlds! The payment history and balances report solely on the business credit reports and there is no personal guarantee keeping the liability strictly tied to the business.

How to identify?

The application requires your business information, Fed Tax ID#, Duns#, personal information but no personal social security number. (No personal guarantee)

Disadvantages

NONE

*Keep in mind there are also business credit cards that allow you to apply with business information only and no personal credit check. However, if you’re business credit scores and files are not strong enough they may require a personal guarantee for approval. I call this the ‘Two Faced Business Credit Card’.

Remember – The direction in which education starts a man will determine his future life.  ~ Plato

To Your Success!

Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club.  Click here to visit his blog and signup free to get strategies, resources, and response-boosting tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.