How to Build Your Business Financial Foundation in Order to get a Small Business Loan.
These are insider strategies given to you courtesy of Sunwise Capital.
We begin by first looking at your setup structure – starting with the name of your business. Even if you are already incorporated or have been in business for a while, we need to check to see if your business conflicts with other businesses or if it could potentially cause Trademark infringement.
Here are just the first 4 steps in that process:
- Credit name search with Dun and Bradstreet. Check to see if any businesses with the same or very similar names are listed with Dun and Bradstreet (D&B). To use D&B’s Find a Company search Click Here. Your business name should already be listed with D&B and it must be unique.
- National name search with Knowx.com. Make sure your name does not conflict with other businesses nationwide using. The cost is $65 but it’s well worth it. The same service is free for our clients.
- Trademark infringement name search. Check with the U.S. Trademark office to make sure your business name will not cause trademark infringement. You can do that for free when you Click Here.
- Finally, you need to search online directories to see if your business is listed correctly, or even listed at all. If your business shows-up, make sure all the information is correct. If it doesn’t show-up, be sure to create a free business listing with the Superpages directory.
You also need to check whether your business is listed in the 411 directory assistance, whether you have a toll-free number, whether all agencies list your business exactly the same and much, much more.
Step 3: Your Business Fund-a-bility
Don’t bother looking up “fund-a-bility” in the dictionary. It’s not there. Fund-a-bility is a phrase coined to describe how a business measures up in relation to the entire business lending and investing community.
It’s not just about your business credit. It includes several key components that determine how your overall business is seen by lenders, investors, insurers, suppliers, and more.
Basically, we know that your business was worth the risk for you, but is it worth the risk for them?
The answer will increasingly be “YES!” as your business fundability grows. At Sunwise Capital (sunwisecapital.com) we can get you the funding you need – even when the bank says, “NO!”
You see, we’re doing more than just helping you build strong business credit. We are improving the overall “health” of your business while greatly increasing your ability to succeed.
One of the best methods to do that is called factoring, in which you get cash for your receivables. This is a great way to increase cash flow that most business owners don’t even know exists. It’s not a loan.
It’s not based on your ability to pay or even your debt-to-income ratio. It’s based on your customers’ ability to pay what they owe. You get your cash in 24-48 hours!
One of the major components lenders look at is your bank account. Everything in business lending and business credit starts from the day you open your business bank account.
Your business banking history is vital to your future success of getting a business loan.
WARNING! DO NOT MOVE BANKS. The longer your banking history is the better.
Step 4: Get set up with all 3 credit-reporting agencies
Like anything else, there’s a right way and a wrong to build business credit. Remember, your ultimate objective is to get a small business loan. You need to go through the process of building strong business credit scores with the Big 3 among business credit reporting agencies.
For example, many businesses set up as sole proprietors or partnerships and operate for years under the mistaken assumption that they have business credit. Wrong! The mistaken assumption is fostered, in part, by the business credit reporting agencies because they give a sole proprietor a credit file and even assign business credit scores.
So why isn’t it reported as business credit? Because all loans and credit lines extended by lenders, banks, business credit card holders, etc. are tied directly to sole proprietor or partner personally. You could be doing business, but you’re not truly a “separate business.”
The solution? In order to build business credit scores separate from you personally, your business must either be incorporation (INC or S-Corp) or a limited liability company (LLC). Now, when you build business credit scores, the loans and lines you receive are not tied to your social security number and will not report on your personal credit profile.
It’s also important to understand which credit agencies will best serve your financing needs. If your goal is to obtain loans or lines from a bank then Equifax may be the most important component of your credit building process.
Equifax operates the Small Business Financial Exchange where banks share business data between themselves. So, if you do not build strong business credit scores with Equifax, you may be eliminating your chances for true bank financing.
Many business credit card providers, leasing companies, vendors and even commercial landlords rely heavily upon Experian BIS (Smart Business Reports).
Building business credit is not complete without having a strong Experian Smart Business profile and score.
You’re almost there. There is only one more part to this series and you’ll be ready to rock’n roll!