Susan loves designing women’s clothes. She opens a boutique with a small amount of capital. Dan’s successful health field company of three years needs to expand inventory. Ken, a construction company owner of 15 years, must hire key people if he is to keep up with technology.
What do these three people have in common? They all need capital infusions. All apply for loans, all are declined. Why? Like most business owners, they have no idea how to position their company for loan or credit approvals.
Approval for a loan begins with credit. There is personal credit. There is business credit. Each should stand alone, independent of the other. If an owner applies for a credit card, line of credit or loan using a social security number, that application approval or denial is based on information from personal credit reports. If an owner applies for credit using only the company Employer Identification Number (EIN), the creditor or lender will review records of the business credit bureaus.
As an owner, building a solid credit profile and populating your business credit reports correctly is essential to obtaining capital for your company. That carefully tended credit will carry you through the financial roller coaster every business owner experiences.
Overview: Funding Preparation – The top two reasons businesses fail are lack of business knowledge and lack of capital. Most owners open their doors being undercapitalized. However, if you take the steps to prepare your company for funding before you get into financial trouble the odds of survival are greatly enhanced. Let’s look at the following overview which is not intended to be a tutorial.
Become underwriting compliant – Not all creditors or lenders have the same requirements. Nearly all creditors want to see your business name recorded exactly the same on all legal documents including tax returns and bank accounts. A surprising underwriting point is making sure your company is listed in the 411.com national directory. There are many other underwriting points.
Check the business credit bureaus – Does your company have active credit files with Dun & Bradstreet, Business Equifax and Business Experian? If not, it simply means you have no credit established with vendors who report to the business bureaus. Your next step is learning how to develop smart strategies for building your credit profile. It’s easy once you understand how to play the credit game.
Build credit – Establishing the right number and types of accounts determines how quickly you will see good, solid credit scores. In Annalea Cornell’s seminar, “How to Get a YES to Your Next Business Loan Request,” you will learn how and when to set up your vendor, store and credit card accounts. When done correctly, you can take your credit scores to good, solid numbers in just a few short months.
Apply for a line of credit or loan – Lenders are not in the risk business. They look at company cash flow, credit, and collateral options. Like any other creditor, they are more likely to grant your loan request if it’s under $50,000. Establish history and a relationship with your lender before requesting larger lines of credit or loans.
Use your credit wisely. Know that you can support any debt you incur. Become educated. Learn how the big companies play the game of finance. Having access to capitalization is the key to the survival of your company.
Seminar: “How to get a yes to your next business loan request”
Date: October 20, 9 a.m. – 12 p.m.
Location: Looking Glass Imports & Café (Shopko Center)