Get Small Business Funding without Giving Up Control
(PRWEB) March 13, 2014 -- With today’s news, it would be easy to think that the only way to get business funding would be through crowd funding, venture capitalists, or angel investors. That is simply not the case. Money from outside investors gives the entrepreneur the least amount of control and make up a very minimal part of how the business can get financing.
Loans to businesses are also being given more frequently as demonstrated by the
Thomson Reuters/Paynet Small Business Loan Index. Below is a brief description of steps to take to qualify for business funding as referenced by the Level4Finance Business Finance Prequalication Engine:
Lender Compliance
Banks and other types of lenders have specific criteria as part of their decision making process. When an application is submitted to the lender, a computer checks the criteria to see if the business qualifies for a manual review in the approval process.
Some examples of compliance items are having a business address that is verifiable with the US postal service database, operating a business from a business or land line as classified by the Federal Communications Commission’s database, and having a federal employer identification number for the business. Not having any of these items, in addition to many others, could get the funding application automatically declined before it is ever reviewed by a person.
Owner’s Credit
Business owners usually do not pay attention to their personal credit scores until business funding is needed. One of the first places a lender will look for confirmation the loan will get repaid is the owner’s and officers’ personal credit.
FICO credit scores are the first thing the lender will look at. In qualifying for business funding, the optimum score is a 700 or higher. Credit usage is also a key factor, meaning there must be positive patterns in the owner’s credit. For example, credit lines are not maxed out, and there is a varied use of credit.
Business Credit
Business credit is an extensively discussed topic as to the meaning in relation to obtaining business funding. Most banks, business credit cards, and major business lenders are reporting small business credit histories as well as checking business credit reports before making approvals.
Something that has changed in business funding in the last few years is business credit is checked by most business loan providers and even SBA lenders. Generally speaking, it is used to determine approval amounts, repayment periods, and interest rates. Having business credit scores at or above 70 plays a large role in things the business can qualify to do.
Obtaining good business credit is just as involved as personal credit. Optimizing business credit scores requires varied use as well and starts with a 1-3-5. This means 1 bank or major account loan such as large equipment lease, 3 business credit cards, and 5 vendor lines of credit. The credit will need to be used every month and paid on time or early for a business to receive any benefit to the score.
The best way to protect the integrity of the businesses credit score from credit inquiries is to find out before you apply for the loan if the business and the owner will qualify for funding.
Level4finance.com was founded to give business owners an edge when trying to secure funding for their company. The site offers a test to see if the business currently qualifies for financing as well as a program make sure the business can qualify for financing through small changes.
Lauren Barclay, Level4Finance LLC, http://www.level4finance.com, +1 (949) 439-7562, [email protected]
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