KICKSTART, INC.

  • Aged Shelf Companies For Sale
  • Build Business Credit
  • Maximize Business Credibility
  • Access Funding
  • Impress Customers
  • Negotiate Better Leasing and Lending Terms

BUSINESS CREDIT HOW-TO

How to Build Business Credit

Step 1: Improve Your Business Fundability

a. Lexis Nexis Reports
b. Business Name
b. Business Phone Number
d. How to Obtain a 411 Listing
e. Business Address
f. Business Website
g. Business Email
h. The Secretary of State’s Office
i. Business Bank Account
j. Your EIN and Business Entity
k. SIC and NAICS Codes
l. Incorporating Your Business
m. DUNS Number

Step 2: Business Credit Reports
Step 3: Obtaining Vendor Credit

Credit Tiers
Business Revenue Financing
Business Funding and Grants for Minority Entrepreneurs
Women

a. Native Americans
b. African Americans
c. Latino Americans
d. Grants Available to All Minorities
e. Government Grants

How to Build Business Credit

Business Credit Benefits

Building business credit has many benefits. A credit profile can be built for a business that is completely separate from the business owner’s personal predict profile, doubling the borrowing ability. Credit limits and capacity on these business accounts is much higher than with consumer credit. Business credit can also be built very quickly with limits 10-100% of consumer credit , and an initial profile only takes 30-90 days to get set up. When done correctly, business credit can be built without a personal credit check. Business credit can quickly be obtained regardless of personal credit quality, and there is no personal credit reporting of business accounts. Most business credit can be obtained without the owner taking on personal liability, or a personal guarantee, which means in case of default, the business owner’s personal assets can’t be pursued. Anyone can see your business credit reports, so having business credit makes you more credible for: Prospects, clients, competitors, lenders, credit issuers and those interested in buying your company. Almost any business can get business credit as long as it has an EIN number and entity setup. You don’t need collateral or financials to start a business credit account, and you can be a startup business. You just need to know the proper building steps.

3 Steps to Build Your Initial Business Credit Profile

A business starts building a brand new credit profile similarly as a consumer does. A business starts with no credit profile. The business gets approved for new credit that reports to business credit reporting agencies. The business then uses the credit and pays the bill timely, and a positive business credit profile is established. As the business continues using the credit and pays bills timely, it will qualify for more credit.

Step 1: Improve Your Fundability

When building an initial business credit profile it’s essential that you meet credit issuer’s criteria. Your personal credit isn’t being used for approval, and you have no business credit yet established. This means that what is on your application is the only thing being reviewed for approval, so your application must be very strong to ensure approval. Have you ever applied for a business credit card and gotten an automated instant approval? Lenders and credit issuers have an unpublished set of standards in their computer system that you must meet in order to get approved for business credit. How fundable your business is will determine if you get automated approvals, or denied. Some fundability factors include: The type of business entity you have, the type of business phone number you use, business phone number, if your business phone number is listed in certain directories, the type of address your business has, the type of business licensing your business has, the congruence of your business records, the types of business lending references you have, whether your business bank account is set up, the way your business website and email are set up, and your EIN, DUNS, and BIN number.

Even if you are fundable, most business loans applications get denied because of potential fraud concerns, not because you don’t qualify. Business Lenders combat fraud by matching your company and application details against other data they have from places such as: LexisNexis, Dun & Bradstreet, Experian, The Small Business Financial Exchange, Equifax, and ChexSystems.

LexisNexis Reports

Your LexisNexis Report includes: Every home you’ve ever owned including value and sale prices; Building materials for your home; HOA info such as beds, baths, and roofing; AC Units; Deeds and mortgages; Title companies; Interest rates; Loan amounts, terms, and loan types; Every phone number and email you’ve ever had; All licenses, firearms, mortgages, and violations; Traffic tickets, felonies, misdemeanors, sex offender records; Name variations; Marriage and divorce records; Every vehicle owned including VIN; Every insurance policy you’ve ever had; Every business you’ve been associated with; Family information including children; Loans and leases; Aircraft and boat owner records; Public records including bankruptcies, judgements, lawsuits; Education information including degrees, schools, dates attended and graduated; Military records; Online marketing records, and short-term credit offer request records.

Business Name

One of the biggest reasons for denial is your application not having the same legal name as what is on file in state records. It is very important that you use your exact business name on all applications. Your full business name should include any recorded DBA filing you will be using. Ensure your business name is exactly the same on your corporation papers, licenses, and bank statements. Your business name could be problematic if you’re in what is considered to be a risky industry. Risk is usually defined as a higher chance of injury on the job or businesses which perform more cash transactions than most other companies. To become more fundable, don’t add the name of a risky industry to your business name.

Business Phone Number

The best type of business phone number you can get is a real physical business phone number through a business phone line. If you have a retail location and can get a business phone line in there, it’s the best most credible form of a business phone number you are going to get. Lenders perceive 800 Number or toll-free phone numbers as a sign of business credibility. Never provide a personal cell phone number or residential phone number as your business’s phone number on an application. A close second that is easily accessible for all of us is called a Voice Over IP, which you can get at Freedom Voice or Ringcentral. Once you get a business phone number, get a fax number as well. Lenders perceive a credible business as one with a fax number. As a business, you will need a fax number to receive important documents, you will also need it to fax in some of your credit applications. You can set up an e-fax that goes directly to your email. Places such as Freedom Voice and Ringcentral can affordably give you a fax number that is identical to your business’s phone number. Once you set up the business phone number, get a toll-free number. A toll-free number also makes your business appear more credible to lenders and credit issuers.

How to Obtain a 411 Listing

Many lenders and credit issuers won’t tell you that you need to get a 411 listing for your business phone number. This is a sign to lenders that your business is already well established because businesses that are just getting off the ground aren’t listed in 411. To get a 411 listing, your phone number must be widely available on search engines such as Google, Bing, and Yahoo. The shortcut to easily getting a 411 listing is by going to: Listyourself.net.

Business Address

If you are operating a business from your home and are using your home address on business loan and credit card applications, you will get denied by most lenders and credit issuers. Lenders use a specific algorithm to easily determine the type of address you provide on applications. They will check your business address on Google Street View and flag it as residential, and you will be denied business credit. Never use PO boxes or UPS addresses on applications for funding or you will get denied loans. The best address to use in order to get approved is a physical business address because most successful businesses operate out of some kind of physical office. If your business does not have a physical address, a good alternative is a virtual address. A virtual address allows you to rent a mailing address and conference room from a large and credible office building. With a virtual address, you do not have to pay an expensive rent or lease. You can buy a virtual address from companies such as Regis, Alliance, or Da Vinci. From a lender’s perspective, your business will look incredibly professional through renting out a space in a credible building, even though your business isn’t actually located there. Ensure your address is the same on all of your online and offline business records, especially with the secretary of state.

Business Website

You must have a professional-looking website and email address. Your business website domain needs to either be yourcompany.com or .net. Never use Wix or Weebly; you will need hosting through a hosting company like GoDaddy. You can buy a domain and set up a website in about a day. Larger hosting companies will provide services to help if you are inexperienced with this. make sure your business is registered with search engines such as YELP.COM, CITYSEARCH.COM, and ZAGAT.COM. It is also essential that your business has registration with 411 information. You also want to make sure that you have a Secure Sockets Layer (SSL), which is standard security technology for establishing an encrypted link between a server and a client. When filling out loan applications, you must know the number of years you have owned your business’s website domain and guarantee that it matches your WhoIS domain listing. Your business website’s search engine ranking and directory listings are also crucial pieces of information for loan applications. Updating your website layout, backlinks, and policies also makes your business seem more credible to credit issuers. Your business website must accept a wide range of credit card companies in order to be seen as credible. Principals listed on your website must match the public record with the Secretary of State, business licenses, and other public data. Consistency is key. Your business website also must have the McAfee, Verisign, and TrustE seal. In the 21st century, it is essential that your business has a strong social media presence. The number of reviews, ratings, check-ins, news coverage, online activity, likes, and followers that your business’s social media page receives will determine your business’s popularity.

Business Email

Not having an email address or website will make your business appear uncredible. Your email address needs to be on the same domain as your website. Generic professional names work well, such as admin@yourwebsite.com or gethelp@yourwebsite.com. Don’t use search engines such as Gmail, Yahoo, or AOL to set up your business email. Don’t worry about checking yet another email address, you can have any email forward to any other email.

The Secretary of State’s Office

Take the time to verify that main agencies (State, IRS, Bank, and 411 national directory) have your business listed the same way and with your exact legal name. Also take the time to ensure every bill you get (power bill, phone bill, landlord, etc) has the business name listed correctly and comes to the business address. The Secretary of State’s office has info on every license needed to run your business. They also have helpful information, like if you need to take continuing education to maintain your license. Processing time varies, and in some states, it won’t be completed in time. But even if licensing will come past the 30 day mark, you can at least get started with getting your licensing. Even business credit providers which insist that you have licenses may make an allowance if you can prove you have put in your application. Be sure to print and keep copies of receipts and forms.

Business Bank Account

Many business credit providers will insist that you have a business bank account. A business bank account will help keep you from accidentally commingling funds. You can apply for business bank accounts at many banks online, even if the bank has a physical location. If you bought a business, the ownership automatically changes on the actual credit report, which triggers a red flag where lenders immediately start going off your bank account start date instead of the start date that the entity was founded. Longer business history is better, so you want to get that business bank account opened because it will be used as a reference. You want to keep a $10,000 balance in your business bank account if you are ever going to apply for a SBA loan. In particular, if you have a personal bank account, and you have managed it well, you can get a business account fast. Bank credit is an internal secret credit score used by the banking system that is based off of your average account balance over the last 90 days. In order for you to have a score high enough to be lendable for a bank loan, you need to have $10,000 on average in your business bank account. Only big banks such as Wells Fargo and Chase pay attention to your bank credit score for lendability. A low five rating is needed in order to get a big bank loan.

Your EIN and Business Entity

Whether or not you have employee numbers, your business entity must have a Federal Tax ID number (EIN). Just like you have a Social Security Number, your business has an EIN number. This is one of two essential items vendors look at for approval. Take the time to verify that all agencies, banks, and trade credit vendors have your business listed with the same Tax ID number. Visit the IRS website to get a free EIN number for your business. You also must choose a business entity, like corporation, LLC, etc. You can start off as a sole proprietor, but you will most likely want to change to a type of corporation. This is to minimize risk and maximize tax benefits. A DBA is not a separate business entity. Getting an EIN and choosing a business entity at IRS.gov are both fast processes.

SIC and NAICS Codes

You will also choose SIC and NAICS codes at IRS.gov. The IRS is moving from SIC to solely using NAICS, but for now, consider both to be available. SIC and NAICS codes classify what type of business you operate. For example, NAICS code 531312 classifies Nonresidential Property Managers. If your business could fit under one or more codes, choose the less risky code. Lenders and credit providers are far less likely to approve a business if they consider it to be risky. Businesses that are high risk have a higher chance of injury on the job or a business with more cash transactions than the average. You can choose codes the same time you get an EIN number and select a business entity. You can get all of this done in less than an hour, internet permitting.

Incorporating Your Business

You can build business credit with any entity type. If you truly want to separate business credit from personal credit, your business must be a separate legal entity, not a sole proprietor or partnership. Unless you have a separate business entity (Corporation or LLC) you might be “doing business,” but you are not truly a business. These entities by default eliminate your personal liability, other entities don’t. The amount of time it takes to incorporate your business will vary. It will depend on the state you are incorporated in and the means you use. In general, the online process will be faster. Even if you apply to incorporate online, you may still have to wait a few business days. In general, you will need Articles of Incorporation. If you want them drafted quickly and correctly, you will probably need to hire a corporate attorney.

DUNS Number

To build business credit, you will need a DUNS number from Dun and Bradstreet. A DUNS number with three or more reported payment experiences will generate a business credit report. Therefore, you will have built business credit. Dun and Backstreet’s free product will send you a DUNS number within 30 days. If you need a DUNS number within a short time frame, you will need to spend $229 to get an experienced DUNS number in five business days or less. $229 with DUNSFile and CreditSignal will also get you credit monitoring, but it is only monitoring of your D&B business credit scores. You will also get alerts when your score changes, and you will get a full basic D&B business credit file.

Aged Shelf Companies

When you start a business with the assistance of an aged shelf company, you can make money by offering your product and services with confidence, credibility and stability. Your business will receive instant access to customers who otherwise wouldn’t buy from you. Your business will also gain instant access to vendors because your aged company meets an age requirement. You will save time because you don’t need to wait for your corporation or LLC to age. Reduce your effort to meet business objectives and reduce stress about your business. You will instantly impress your customers, vendors, suppliers, supporters, and advertisers. Through partnering with an older company, you will maximize finance options and obtain better financing terms for your business. You will increase and extend cashflow for your company as well as gain immediate credibility. Access a wider variety of bidding opportunities and gain better positioning to take advantage of such opportunities. Your business will automatically meet unforeseen demands to meet obligations. It will be much easier for your business to close sales and handle objections. Avoid hassles when signing leases and rental agreements for space or for equipment. Minimize the risk of business failure due to an enhanced ability to close the sale, increase revenue, and negotiate on strength. Access additional lines of credit as a result of increased revenue. Vendors and customers seek to do business with a company that’s been around for years rather than weeks.

Step 2: Your Business Credit Reports

You will first want to get a copy of your business credit reports to see what is currently being reported. You will also want to dispute any inaccurate information from these reports. Business Credit reports are offered by Experian Commercial, Dun & Bradstreet, and Equifax Commercial. These reports look and feel different than consumer credit reports, so make sure to thoroughly search them to better assess your business risk.

Business Credit Reports

Business Credit Reports list: Details on payments the business has made for each individual account; Full payment record; Upper credit limit; How much the business owner currently owes on each account; How much is past due; What the terms of the account are; When the account was reported and last updated; Payment details for each account; Payment patterns; Current assets; Liabilities; Working capital; Net worth; and sales.

How to Prevent Declines

The most common reason for denial is that there is no established business credit. Business owners are not required to state a reason for denial. Businesses don’t have a business credit profile in the beginning, but you can be given a credit profile with Experian and Equifax, even if you have no business credit. Having no established business credit at all can result in failing scores, so even one account reporting can give you a positive business credit score. When you get more business credit accounts, you can access higher tiers of business credit. First, get business credit that reports, which will count as trade lines and give you a business credit profile. Having a business credit profile will help you get approved for financing, and paying the bills on time will give you a good business credit score. A good business credit score is what determines the interest rates that you will pay. Business credit rates are determined similarly to consumer credit rates, as interest rates are determined by good credit scores.

Experian

Visit: http://www.smartbusinessreports.com/ for a copy of your Smart Business report, which costs around $49-99. Find out how many trade lines are reporting, see if you have a business credit score assigned, see if you have an active Experian Business Profile, and check on recent inquiries.

Equifax

You can purchase a copy of your Equifax Small Business Credit Report at: http://www.equifax.com/small-business/credit-report/en_sb. It typically takes more time to create a file with Equifax Small Business than D&B and Experian. This is why it is important to apply with the credit providers who report to Equifax.

Dun & Bradstreet

Obtaining a Dun & Bradstreet number (D-U-N-S #) begins the process of building your business credit profile with them. Your D-U-N-S # will also play an important role in enabling your business to borrow without a personal guarantor, and it is free at http://www.dnb.com/. D&B will “roll” this into a package and charge you $2,000 or more. You can also enroll for the DNBi SelfMonitor to monitor your credit during the building process. A subscription for D&B Self Monitoring is $39-99 per month.

Business Credit Scoring Factors

Business credit scoring factors are primarily based on payment history. Personal credit has five different components:

Payment history 35%
Utilization 30%
Credit mix 10%
Length of Credit History 15%
Accumulation of new credit 10%

These percentages matter because when you try to fix one component of FICO, it hurts another. Because trying to improve one factor hurts another, it is very difficult to get good personal credit scores. It usually takes people into their 40’s or so to get credit scores of 800. Business credit, however, is based primarily on payment history. Dun and Bradstreet scores are strictly based on how you pay.

Expect payment may come early 100
Payment is prompt 80
Payment comes 14 days beyond terms 70
Payment comes
21 days beyond terms 60Payment comes 30 days beyond terms 50
Payment comes 60 days beyond terms 40
Payment comes 90 days beyond terms 30
Payment comes 120 days beyond terms 20

If you get business credit accounts that report to agencies such as D&B, Equifax, and Experian, and you consistently pay your bills on time, you will build a good score which will drive future approvals.

Read and Understand Your Reports

Business credit reports are very different from consumer reports. Most reports have five scores on them, all assessing risk for different things. The main score in the business world is the PAYDEX score, which is based solely on payment history; very different from consumer scores.

PAYDEX Score

This is D&B’s dollar-weighted numerical rating of how a company has paid its bills over the past year. D&B bases this score on trade experiences reported by various vendors. A PAYDEX score ranges from 1 to 100. Higher scores mean a better payment performance. PAYDEX scores reflect how well a company pays its bills.

What Influences Your PAYDEX Score?

Larger bills get more weight in the calculation. It leverages data from D&B Global Trade Exchange Participants to calculate a dollar weighted average days to pay. D&B suggests that businesses use it for risk knockout. Payment experiences are gathered by D&B from suppliers and vendors a firm does business with. Each experience reflects a different supplier and reflects how bulls are met within relation to the terms granted. Up to 875 payment experiences are used to generate the PAYDEX score, and up to 80 representative payment experiences are reported in your business credit report.

PAYDEX Numbers

D&B has created risk categories to make it easier to translate a PAYDEX Score into understandable risk groups:

PAYDEX 80-100: Low risk of late payment
PAYDEX 50-79: Moderate risk of late payment
PAYDEX 0-49: High risk of late payment

Based on changes to your PAYDEX, D&B takes a proactive approach to notify you when a change in your score is bringing you closer to a different risk category.

Improving Your PAYDEX Score

Addressing any problems with your PAYDEX score head-on is a useful strategy. Hence, if your business is regularly late with payments, then you will need to address issues of organization and perhaps time management. You may need to hire an accountant or make a simple adjustment such as setting bill payment reminders in your phone. Since PAYDEX Scores are dollar-weighted, you quite literally get more bang for your buck by paying your bigger bills first. Because your PAYDEX Score reflects trends, you can help out your business by starting a practice of paying on time and sticking with it.

D&B Business Information Reports

For a snapshot of your business’s financial health, the best report to get is probably a Business Information Report, which currently costs $139.99. You can get a Business Information Report on your own business or a company you’re considering doing business with. In addition to a PAYDEX Score, a D&B Business Information Report contains trade payments, trade line specifics with dollar amounts and terms, legal events, company events (mainly concerning ownership and management), and a company family tree showing ownership specifics. A Business Information Report also contains a Risk Assessment Summary. A Risk Assessment Summary shows maximum credit recommendation, your business’s PAYDEX score, Delinquency Predictor percentile, Financial Stress percentile, and Supplier Evaluation risk.

Monitoring Your D&B Credit Scores and Reports

Business credit reports are not always perfectly correct. All of the major CRAs, including D&B, are committed to accuracy. However you won’t know there are errors unless you monitor your business credit reports. For D&B only, you can monitor your business credit reports via CreditMonitor, which currently only costs $39 a month. To purchase a business credit monitor, visit: dnb.com/products/small-business/credit-monitor.html. The costs of business credit monitoring can add up fast. At Experian, your best bet would be a Business Credit Advantage Subscription Plan, which currently costs $189 per year. To purchase a Business Credit Advantage Subscription Plan, visit: sbcr.experian.com/pdp.aspx?pg=Sample&link. At Equifax, you would use Equifax Complete, which currently costs $19.95 per month after an offer of 30 days for $4.95.To purchase Equifax Complete, visit: equifax.com/equifax-complete/Equifax. Add all of these plans together for the year and it is $468 for D&B, $189 for Experian, and $224.40 for Equifax for a grand total of $881.40. You can monitor your business credit at D&B, Equifax, and Experian through Credit Suite for considerable savings over what it would cost you at those CRAs all in one place. Credit Suite offers monitoring through the Business Finance Suite. See what credit issuers and lenders see so you can directly improve your scores and get the business credit and funding you need. Visit: creditsuite.com/monitoring.

Correcting Your D&B Credit Scores and Reports

If errors are bringing your score down, then correctly those mistakes will raise your PAYDEX score. Get a Business Information Report from D&B at: dnb.com/products/small-business/business-information-report-snapshot.html. After reviewing your Business Information Report, update the relevant information if there are mistakes or the information is incomplete. At D&B, you can do this at: dnb.com/duns-number/view-update-company-credit-file.html

Disputing Issues With Your D&B Credit Scores and Reports

D&B won’t change your business credit scores without proof. Disputing business credit report errors normally means you have to mail a paper letter. Be sure to include duplicates of any proofs of payment with it. These are documents like receipts and cancelled checks. Never mail the originals, always send copies and keep the original copies. Fixing credit report errors also means you specifically spell out any charges you challenge. Make sure your dispute is as clear as possible. If you need to mail anything in, then use certified mail so that you will have proof that you sent in your dispute. Be specific about the concerns with your report D&B wants you to go through D&B Customer Service to add payment experiences. D&B’s Customer Service contact number can be found at: dandb.com/glossary/paydex.

Recap

D&B collects objective data points on businesses and creates Business Information Reports from them and other reports. The more information D&B has, the more comprehensive the report is. It is in your best interest to monitor your D&B reports, and correct or dispute any issues you find.

Step 3: Get Approved for Vendor Credit

There are Five Ways Build Business Credit:

Credit Line Hybrid

The first way to build initial business credit is by using a credit line hybrid, which is business credit that requires a personal guarantee and personal credit check. The benefit of credit line hybrid is that you can get high limit credit lines, no dock, without cash flow verification or collateral. Credit line hybrid reports to the business credit reporting agencies. You can build initial business credit with real cash and get credit lines of up to $150,000 with 0% rates for 18 months. Startup businesses and credit partners are welcome. With Credit Line Hybrid, you can get business and standard credit cards with funding free roll-in.

D&B Credit Profile

D&B Credibility only offers one way to start a business credit profile and they will try to convince you that it is the only way, even though it’s not. They will charge upwards of $2,000 to put trade lines on your report using your current creditors. These only report to D&B and take time. They choose what can and can’t get added, and most cannot get added. They won’t add bank credit, leases, rent, cell phone, or utility payments. You don’t obtain usable credit at all, just your current creditors are added.

Unsecured Business Financing

You get to use your good personal credit and you don’t mind using a personal guarantee of yourself or guarantor, and you get physical cash credit cards such as Visa cards, MasterCard, or AMEX. With Unsecured Business Financing, you can get up to $150,000 with 0% rates for 6-18 months. You are getting five to eight actual credit lines that report to the business credit reporting agencies. Guarantees and startup businesses are welcome. To get unsecured business financing, vist: creditsuite.com/funding

Credit Suite Monitoring

Credit Suite’s monitoring program allows you to take accounts you already have, including utilities, water, gas, electric, cell phone, internet, and add them to your Experian credit safe business credit reports. This is a newer and faster way to add accounts you already have, and if you combine that with vendor credit it works really well.

Vendor Credit Accounts

Another alternative to build initial business credit is by using vendors. Vendors are credit issuers that offer terms like Net 30, which would give you 30 days to pay it off in its entirety. Trade vendors will give you business credit when you buy products from their establishment. However, over 97% of trade vendors don’t report to business credit reporting agencies. It is essential to find vendors that report to business credit reporting agencies when you have no business credit already established in order to build initial credit. Utilize start vendors such as Quill, Grainger, and Uline Strategic Network Solutions. Get credit with these companies and then use the credit after you have paid the bill and the item has been shipped. Then, these companies will report to the business credit reporting agencies, and you will successfully obtain trade lines.

How to Obtain Vendor Accounts

When you have no prior business credit reports established, you must start building credit using vendor accounts. These are accounts from vendors who give you initial credit, even if you are a startup business. Vendor credit reports to business reporting agencies, so you get real credit and build business credit at the same time. You must start a business credit profile and score with starter vendors. Starter vendors will give you initial credit even if you have no credit, no score, or no trade lines now. Most stores like Staples will not give you initial starter credit, so you shouldn’t even try applying.

True Starter Vendors

Laughlin Associates
Laughlin deals with corporate setup and compliance. Their company reports to Experian. Your business’s 411 listing and EIN number are the only materials required. Laughlin reports business credit in 30 to 60 days and offers Net 30 terms.

Quill Office Supplies
Quill Office Supplies sells Office, packing, and cleaning supplies. Quill reports business credit to D&B. You must place an initial order first unless a D&B score is established. Sometimes you will need to place up to 3 orders of $50 or more for them to approve you with no initial credit established.

Gempler’s/Office Depot
Gempler’s and Office Depot sell work supplies and products. They report business credit to D&B. You must place an initial order over $50 dollars and select the “Invoice me” option. Then, they will pull your credit. If you are not approved, pre-pay for your order and keep purchasing and choosing the “invoice me” option until you are approved for Net 30 terms.

Reliable Office Supplies
Reliable Office Supplies sells supplies and promotional products. Reliable Office Supplies reports to D&B, Experian, and Equifax. Place an initial order, then request your order be invoiced or billed to your company. They will then pull your credit. If you are not approved, keep ordering and requesting to be invoiced or billed The more orders you place, the better your chance of approval for Net 30 terms

Uline Shipping Supplies
Uline Shipping Supplies sells shipping, packing, and industrial supplies. Uline reports business credit to D&B. You must have your DUNS number, and they will ask for two references and a bank reference. The first few orders might need to be pre-paid to initially get approved for Net 30 terms.

Monopolize Your Marketplace
Monopolize Your Marketplace sells everything you need to know about marketing and business in a 10 audio CD set. They report business credit to Experian. Upon check out, choose “4 equal payments of $59.99” option. The first charge will take place in 30 days. You need a business bank account, EIN number, and deliverable address in order to qualify. Reporting business credit will take approximately 30 to 60 days.

Strategic Network Solutions
Strategic Network Solutions reports business credit to Experian. You will need a DUNS number, business license, and EIN number.

Summa Office Supplies
Summa reports business credit to D&B and Equifax. Summa requires a minimum purchase of $75 to report business credit. Approvals require an EIN number, entity, business address matching everywhere, business license if applicable, business bank account, and a DUNS number.

Wells Fargo
Wells Fargo has a secured credit card that will help you build initial business credit.

Behalf
Behalf offers financing for your customers. They will report business credit to Experian, Equifax, and D&B.

Things to Remember

You might need to get some vendors you won’t often use just to build your initial credit. Do not put your SSN on any of these applications. Paying your bills early is the key to a good score. Do not start with store credit because you will get denied. Wait until you have at least five accounts reported. Do not apply for cash until you have at least ten reported accounts.

Credit Tiers

Vendor Credit Tier

Vendors are credit issuers that offer terms like Net 30, which would give you 30 days to pay it off in its entirety. Some vendors ask for your EIN number or 411 listings. Utilize start vendors such as Quill, Grainger, and Uline Strategic Network Solutions. Get credit with these companies and then use the credit after you have paid the bill and the item has been shipped. Then, these companies will report to the business credit reporting agencies, and you will successfully obtain trade lines. Where an account reports is called a payment experience. The more payment experiences you have, the more credit you will be able to obtain. A vendor that reports to one business credit reporting agency counts as one payment experience, while a vendor that reports to three agencies counts as three different payment experiences. This way, you will build credit faster and more efficiently.

Retail Credit Tier

With five or more payment experiences, you can move on to the Retail Credit Tier. You can get to this point in about 60 to 90 days. At this stage, you are building store credit with retailers such as Best Buy, Amazon, Apple, Costco, etc. to buy electronics and supplies for your business.

Fleet Credit Tier

It takes about ten to fifteen accounts reporting to reach the Fleet Credit Tier. You need at least one account with a $10,000 limit, and a 75 paydex score, which means you pay your bills as agreed. At this tier, you are able to buy fuel, repair, maintenance. At the fleet credit tier, you are buying from places like BP, Conoco, and Shell. Shell, for example, reports to D&B and Experian, which means you would need a Paydex score of 78 and a 411 business listing.

Cash Credit Tier

You will reach the Cash Credit Tier with fifteen or more accounts established. This tier is where you keep building business credit to qualify for more high limit accounts. You are able to get more from credit cards such as Visa, MasterCard, and American Express cards without the personal guarantee and personal credit check.

Responsible Credit Management

In order to responsibly manage your credit, you must pay your bills on time. Paying in full does more to raise your business credit scores than anything else. With fifteen accounts or more, you get to the cash credit tier where you get credit cards with personal guarantee or personal credit check. Business credit scores are primarily based on paying bills early, which really makes a huge difference.

The Cost of Not Having Business Credit

Did you know not having business credit can be costly? Let’s look at what it can cost you to not have business credit, because it could end up being unaffordable.

Without Business Credit, how is Your Company Funded?

You are going to need startup and other funding for your business. If you can’t borrow under the creditworthiness of your business, what can you do? There are some options that don’t involve establishing business credit, however they are ultimately riskier and more time consuming.

Traditional Bank Loans

With no business credit, a lender will look at your personal credit and personal assets. You will most likely need to provide a personal guarantee, which means your personal assets, like your house, are on the line. There could be a hard inquiry on your personal credit, which makes your FICO score go down. A bank wants to make money on its loans, so without business credit they will consider a loan to you to be riskier. They want to be paid back without business credit, so they are less likely to believe you will make good on your promise to pay back a loan. A lender will cover itself with higher interest rates, higher fees, and shorter payment terms.

Personal Credit

Using personal credit to fund your business is a terrible idea. But if you don’t have business credit, you may need to explore such an idea. Using your personal credit for business expenses means more inquiries into your personal credit and a higher utilization percentage. Both of these can lower your personal credit scores. If your business fails, and nearly a quarter fail in the first year alone, then you still have business expenses on your personal credit cards. You could be out of business for years and still be paying off your business debts. For more information, visit: national.biz/2019-small-business-failure-rate-startup-statistics-industry

Bootstrapping

If you have the funds, then you can finance the start of your business, and if you have enough money, you can technically keep donating to the cause until your business becomes profitable. That wait could be for two to three years on average until a business turns profitable. Consider brand-new industries, which need to convince their prospects that they are providing a necessary good or service. That may take a very long time. If you have thousands of dollars just lying around, and you can afford to keep them tied up for years, then this could work. For more information, visit: freshbooks.com/hub/startup/how-long-does-it-take-business-to-be-profitable

Venture Capital

When it comes to brand new industries, venture capital firms are on the lookout for the next big thing. After all, it wasn’t long ago that if you said people would pay to stay at another person’s home or to be driven by them in their car, nobody would have believed you. Yet Airbnb, Uber, and Lyft are now all viable business ventures. Venture Capitals often want a large percentage of a business and you end up trading control of your business for business funding. If you do not want to do this, then Venture Capital funding is not for you. Plus, Venture Capitals are really only looking for paradigm-shifting businesses. An over the road trucking company probably won’t get their attention.

Angel Investing

Angels are much more informal investors than Venture Capitals. Angels tend to invest less and they often want a smaller percentage of the business in exchange for an investment. But you are still trading some of your control of the business for the money you need. Angels tend to be people you know well or people you don’t know if you are good at networking and can make a compelling case to relative strangers. Depending on angel investing means you are depending on investors having some discretionary income to plow into the business. This means it isn’t going to be an option for many people. It helps if your angels are at least middle class when it comes to income and savings. Angel investing needs some numbers behind it to really work out. But how many people have around $5,000 to just invest in an unproven business? After all, before the pandemic, the Federal Reserve estimated over a third of all Americans can’t cover a $400 emergency expense. For more information, visit: fool.com/the-ascent/banks/articles/does-average-american-save-money

Crowdfunding

Five dollars here and there is exactly how crowdfunding operates. You need to have success with crowdfunding, which is often a winner take all proposition. According to Stratista, the success rate for kickstarter businesses is only about one third. For more information, visit: statista.com/statistics/235405/kickstarter-project-funding-success-rate. Crowdfunding may be helpful, but don’t literally bet your business on it. Much like Venture Capital, straightforward businesses probably won’t do well. For example, a beauty salon is probably not going to do well on Kickstarter unless it’s goal is extremely modest.

SBA Loans

You could try getting business funding from the Small Business Administration, however SBA Loans are hard to get. Plus, you need to have exhausted other means of raising funds first. For more information, visit: sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility


Beyond the PPP, the SBA has other loan programs. But they have their own eligibility requirements and good business credit can help you get them. The Community Advantage program is good for small businesses in underserved markets. There is also Express Bridge, but your business has to be located within a declared disaster area. For more information, visit: sba.gov/partners/lenders/7a-loan-program/pilot-loan-programs

Government Grants

Grants usually do not have to be paid back, and the size of grants varies widely. You can check the USDA for rural grants, and grants.gov for more urban projects. Grants tend to have rather narrow applications. There tend to be grants for education and medical projects and certain types of developmental projects, but grants tend to not be for simply running a business. The US government won’t give out grant money for starting businesses as these are grants, not loans. Grants are also extremely competitive. Your business may obtain more government grants if you are a member of a minority or a veteran. You can also try state, city, and county governments. You may have more luck with helping to develop and gentrify local areas. Community and urban development tend to be popular angles for state and local grants. States and cities might provide grants to start businesses. It never hurts to check and ask.

Without Business Credit, How Does Any Business Know If Your Company Is Reliable?

A business credit report is used by more than just lenders and credit card companies. It can also be used by insurance companies and other organizations evaluating a business deal. Your business can also use business credit reports, after all, you may need to check if a potential client will pay you. That’s very useful information to have, particularly before you spend time and money trying to court a prospect.

Business Credit Can Fix These Problems

You need significant money to start a business. There are problems with all of these alternative financing methods. They all cost you more than having business credit does and applying for all of them will take you longer, and it could end up being the only thing that you, as a business owner, do with your time. With business credit, your personal credit scores are protected, you don’t have to gamble your house on your business, any type of business can qualify, and new businesses can better compete with older, established businesses. With business credit, you work with information that is current, accurate, and unbiased as the business CRAs can make it, which should make you more confident in your decisions on which companies to do business with. You also don’t have to try for hard-to-get grants or make a go at crowdfunding, both of which don’t have such great success rates. Business credit is a great way to fund a new or pre existing business. It is the best way to raise money without collateral, good personal credit, cash, or a credit partner. Building business credit is an important step for any business to take.

Recap

With no business credit, doing business will be considerably more expensive than it needs to be. It can trash your personal credit and it unnecessarily jeopardizes your personal assets. Keep your savings and protect your home with business credit.

Business Revenue Financing

Revenue Lending Features

Revenue lending offers fixed interest and fixed payments. Revenue lending also has features such as unsecured loans and no collateral, however there is a personal guarantee. Daily micro-payments are only collected on business days. Term loans vary from 6,9,12, 15, and 18 months.

Benefits of Revenue Lending

One benefit of revenue lending is that it is up to half the cost of a Merchant Cash Advance. Merchants do not need to change credit card processors. All applicants are directed to the appropriate funding program option based on their business credit profile. Successful repayment builds business credit and reports to bureaus as an official lender. Interest tax from revenue lending is deductible. All clients receive Business Performance Reports, analyzing the overall health of the business. Revenue lending offers a personalized online monitoring system that allows customers to track payment progress. Enrollment in “credit reporting services” is not necessary. Revenue lending is set up as automatic debits of revenue, which means that your business can get funding in less than two weeks. Revenue Loans are unsecured, and no collateral is required. Revenue lending is a great way to access capital with shorter term and competitive pay back terms, which is beneficial for seasonal businesses. Revenue lending offers loans for $5,000 to $150,000 with terms from 3-18 months and flat fixed rates.

Qualifications

To apply for revenue lending, you must provide the last 4 months of Complete Bank Statements and Merchant Complete Processing Statements. You should provide 12 months of Bank Statements and Merchant Complete Processing Statements if your business is seasonal. To qualify, your business must be established for at least a year, and your business’s annual gross revenue must be $150,000 or more. Your business must also have 30 average monthly transactions. Some sources of revenue lending want credit card sales over $10,000 monthly, and an average transaction amount less than $500.

Credit Qualification

For your credit history to qualify for revenue lending, you must have: No derogatory credit within the last 12 months; No BKs; No judgements or collections in unpaid status; Personal credit scores greater than 500; and a clean business history with no judgements or unpaid late loan payments.

Business Revenue Lending

Multiple lending partners gives clients the best chance of business revenue lending approval. Lenders will look at your business’s bank balance. It is easier to qualify for business revenue lending when your business accepts credit cards. Business revenue lending is ideal for main street small businesses with high foot traffic and low ticket items who are in need of short term working capital. Perfect industries with typical high transaction volume and low ticket value industries include restaurants, pharmacies, salons, apparel, pet care, medical clinics, manufacturing, furniture stores, grocery stores, gift stores, small gas stations, and many more. The typical financing needs of a small business include average annual financing of $30,000 with the purpose of buying new inventory, equipment, remodeling, and advertising. The likelihood of obtaining a bank loan is about 30%. Typical funding sources for these businesses are home equity lines, persona; credit cards, and retirement accounts. For merchants who do not currently accept credit cards, they will get $5,000 to $75,000 in lending on 6 to 9 month terms. For merchants who do currently accept credit cards, they will get $5,000 to $150,000 in lending on 6 to 18 month terms.

Pricing

Business revenue lending is priced similarly to factoring. Business revenue lending is not based on interest. Factors typically range from 1.18 to 1.39, and as high as 1.42 for high risk businesses.

Revenue Lending “Lender Sweet Spot”

Medium risk businesses can obtain revenue lending of up to $100,000 via Traditional Program. Your business must be established for at least three years with over $300,000 in annual revenue. Your business must also have an average bank balance of $5,000 and a credit score greater than 600. Medium risk businesses can be given 6 to 12 month terms. $50,000 and over is needed to submit business and personal financials with application.

Revenue Lending Lender Preferred Deals

Preferred and Platinum deals can lend up to $150,000 for up to 12 months via Traditional Program. You can also be lended up to $100,000 between 12 to 18 months with a credit score greater than 600. The main differentiator is a reduced “risk profile”. High Risk deals can offer up to $50,000 via an Alternative Program. For this plan, your business must be established for two years. The max loan term is 9 months with a credit score of less than 600. The main differentiator is a high risk profile that includes thin lines.

Underwriting Process

The Underwriting Process begins when the Finance Officer pre-qualifies clients and submits completed application with 4 months of bank and merchant processing statements along with the application. Loans above $50,000 might require a signed copy of the previous year’s business and personal tax return, profit and losses, and balance sheet. In addition, you must provide a year to date financial profit and loss balance sheet. You will get a decision within two days, the lender recommends the type of loan via pre-screening types including Traditional, Standard, and Bank Only. Additional documents are collected as requested. The package is sent to underwriting for full review and generates a detailed analysis. The grading report includes loan options recommended, and the applicant accepts specific loan options. Next, origination documents are prepared and the applicant completes paperwork and submits necessary support documentations. The lender will then fund the loan within two days.

Renewal Loans

A renewal loan can be initiated at 55% of the down payment on the initial loan. If there are no client performance issues with initial loans, the client can receive renewal funding equal to the initial funding. A down payment using renewal funding is needed to ensure the total amount of funding does not exceed the initial funding. This method frees up additional capital as opposed to waiting to pay down original loans to assist clients in responding to new or urgent funding needs.

Other Details

Two transfer methods available are ACH and Transfer Account, which is a lockbox that collects payments via credit card receipts. Business performance reports provide snapshots of how creditors view the financial health of the business. Business performance reports and only sent to FO/AD for review with the client. The business performance report is available once underwriting completes the preliminary review. The grading report provides details sufficient to address credit repair opportunities.

High Risk Industries for Revenue Lending

One high risk industry for revenue lending are financial services such as mortgage lenders, credit card protection, credit restoration and credit repair, check cashing, collection agencies, wire transfers, factoring organizations, and mortgage reduction services. Investment opportunities such as timeshare investments, real estate brokers, real estate management companies, currency exchange, accountants, insurance related, payroll company, financial transaction processing, service industries, ticket brokers, and personal trainers. Dealerships such as ATV sales, auto dealerships, motorcycle dealerships, motorhome dealerships, and boat dealerships. Vices such as adult entertainment, lotteries, raffles, gaming, gambing, drug paraphernalia, gambling establishments, horoscope, fortune telling, firearm sales, escort services. Some miscellaneous industries that are considered high risk to revenue lenders are, state and government agencies, airlines, not for profit, virtual auction houses, fraternity and sororities, freight brokers, marinas, vitamin retailers, some building and remodeling construction, attorney, cemetery and funeral homes, child day care services, fitness and recreational facilities, golf courses and country clubs, printing, schools, sports and recreational instruction, travel agencies, and transportation.

Underwriting Documents

Certain documents are required for revenue lending qualification, such as proof of U.S. citizenship, drivers license, social security card, voters registration card, birth certificate, permanent resident alien card, and medicare enrollment card. A signed application and agreement with a voided business check are essential documents in revenue lending approval.

You must provide three years of your business lease or proof of ownership and a full federal tax return, personal required if sole proprietorship, and business required if corporate.

Another Great Revenue Option: Purchases of Future Receivables

The target client for future receivables are businesses with many small transactions, although some flexibility does exist. Future receivables are not loans, rather the funder purchases future receivables at a discounted amount and it is paid back via small daily payments from the client. An exception is that the first funding limit can be exceeded to a maximum of $100,000 if the client has a legitimate contract with a reputable firm that establishes a higher annual sales potential above $150,000 annually. The intended use of funds required can lead to higher funding if use is growth oriented. There are no origination fees, which is common among competitors.

Qualifications

To qualify for the purchase of future receivables, your business must be more than a year old and have $150,000 or more in sales. Internet businesses are excluded, and you must have a physical location. It is acceptable if the business location is connected to your home.

Credit Qualifications

A personal credit of application FICO 520+ is required for approval, and all owners must sign the application. Your business must have open bankruptcy, prior bankruptcy is alright but it must be discharged. Tax liens must be on payment plans at minimum. Balances for other debt, business only, should not be more than 40% of amount funded, payoff letters are sent to confirm required payoffs have been completed.

Underwriting Process

Funding can be completed in as few as seven days. The proposal includes preliminary numbers generated within 48 hours of receiving application and bank statements. For your business’s final review, add three to four days once signed contracts are received. Additional documents and information may be requested during the Final Review period. Funding occurs within two to three days following receipt of additional information and documents and completion of Final Review. A package is sent to underwriting for full review, and any additional required documents or information are identified. Additional information is submitted to underwriting for closing. Underwriting assigns status as Fast Track or Complex Track. Fast Track should fund within five days of receiving contracts, and Complex Track is likely to require a more stringent underwriting process, and may require longer to fund. In a client interview, the funder contacts clients directly by phone if there are additional specific concerns or questions. The final funding status is posted to CRM as an updated Deal Status Report. Underwriting contacts clients to complete the Welcome Call on the day before funding. Funding is completed using ACH or wire.

Premier Program

Premier funding programs offer funding ranging from $10,000 to $75,000. Minimum business sales must be $250,000. Your business also must have a minimum FICO score of 650, a minimum of 20 deposits per month, and a minimum of 30 tickets per month.

Standard Program

Standard funding programs offer funding ranging from $5,000 to $75,000. Minimum business sales must be $250,000. Your business also must have a minimum FICO score of 520, minimum of 20 deposits per month, and a minimum of 20 tickets per month.

Underwriting Requirements

Underwriting for these funding programs requires a completed application form and authorization to release an Information Form. You must provide the last 4 months of complete bank and merchant processing statements, if the business is seasonal, provide 12 months of complete bank and merchant processing statements. If your business does not accept credit cards, provide 6 months of bank statements. Loans above $35,000 might require a signed copy of the previous year’s business and personal tax return, profit loss and balance sheet. In addition, provide year to date financials, lien and judgement releases and payment plans, previous landlord and business address if your business recently changed location, franchise agreements, and business licenses.

Benefits

Business Revenue lending is a great way to access capital with shorter terms and competitive pay back terms, which makes revenue lending a great option for seasonal businesses. Business Revenue lending also offers loans from $5,000 to $150,000, terms from 3-18 months, and flat fixed rates.

The Small Business Financial Exchange

The Small Business Financial Exchange is a trade association that aims to be a trusted advocate for small businesses’ healthy and secure growth. They do this by collecting and protecting the largest aggregation of small business payment data in the US today and using the power of that data to help the lending industry create a real and reliable image of small business credit health. Essentially, they collect data from members and then interpret it.

Membership in the SBFE

Small business lenders and other types of companies are becoming SBFE members. They provide the SBFE with their commercial performance data and this data is secured from marketing use. This knowledge is then normalized by the SBFE so that they can make better comparisons.

SBFE Members and Data

There are about 135 members, including 420 total portfolios, and conventional financial lenders contribute to 69 percent of these. These huge numbers help to make the SBFE a small business lending champion.

Membership

Anyone who has the capacity to report information to the SBFE about their small business lending may become a member of the SBFE. Both types of financial institutions, including banks, credit unions and alternative lenders, are members. Doing business with exchange partners will benefit you, but if you do not do it correctly, it can also harm you. When you do business with members of the SBFE, you remove the risk of not getting any business credit. However, if you do not treat your business properly, it will not be favorable for the report representatives to get to your business. Members agree to report positive and negative facts at the same time. For more information, visit: sbfe.org/small-business-resources

SBFE Members (Lenders and Credit Providers)

Some of the best-known credit providers and lenders are members of the SBFE. They include American Express, Bank of America, Online Lender Fundation, and Wells Fargo.

SBFE Certified Members

The SBFE controls the consistency of the data contribution and verifies vendor compliance. There are four members who are accredited, including D&B, Equifax, Experian, and LexisNexis. These organizations develop risk products exclusively for members, using SBFE.

Certified Vendors

Credit vendors are agencies that have a partnership with the Small Business Finance Exchange. Credit vendors distribute the SBFE data that they collect. They do this by designing items for credit review using the knowledge given by the Small Business Finance Exchange. Credit vendors then report the details to members seeking a credit report on an enterprise that is included. There are other credit institutions open to lenders, but when they are a member of the SBFE and use one of these credit vendors, they get the benefit of the vendor’s own information. Plus they get information from the data received from the Small Business Finance Exchange.

SBA Members and Data Products

SBFE data-driven goods may be purchased by members. These products are produced by SBFE Accredited Vendors and offered by them. These commodities are then used for decision-making on credit. They are used to screen portfolios as well. For more information, visit: sbfe.org/certified-vendors

Why Should Merchant Acquirers Become Members?

SBFE data can enhance the ability of a merchant to price offerings efficiently by improving their risk management ability. They would be able to view the current activity of borrowing and a merchant’s debt status. The early warning signs that a merchant may be in financial trouble might be missing without the use of SBFE data-driven products. To verify the existence of a small company, merchants may use SBFE data-driven products. Information on one of the largest repositories of commercial data in U.S. industry, including name, address and contact information, can be accessed.. For more information, visit: sbfe.org/membership/merchant-acquirers

What Kind of Data do They Have on a Business?

Merchants have access identifying information such as business name, DUNS number, EIN number, address, and NAICS code. Merchants also have positive and negative payment details, credit account limits, lease payment payment records, and credit card payment history.

How the Small Business Finance Exchange Can Help Your Business

By doing business with SBFE representatives, the SBFE will help you create business credit. Then you know it’s reporting your stuff. Positive recorded knowledge creates business credit. The SBFE is also able to help you grow your business. Better business credit provides more opportunities for access to funds that can be used to grow and develop your business with these funds. Via the SBFE, you might have expanded funding options. The data available from SBFE about your company might open up potential funding opportunities that would not otherwise be available. If you extend credit to clients, they will help you make better lending decisions.

Which Actions Can a Business Take?

You are accountable for your business credit as a small company. What data ends up on your business credit sheet, you power. You will regularly pay your bills on time, do business with members of the SBFE, and invite businesses you do business with to join the SBFE.

If you are registered, you can enter the SBFE, but your own data can not be self-reported. Through joining the SBFE, if you are lacking in that area, you can make better credit decisions for your business and add some credit. A company may take business credit actions that include obtaining vendor credit, obtaining business credit cards, applying for Credit Line Hybrid, and monitoring your business credit information.

Credit Monitoring

There are multiple ways to monitor credit. One choice is to ask one of the business credit reporting agencies, including D&B or Equifax, for a business credit report, however this is expensive. Joining a credit monitoring program, like the one given by Credit Suite, is a more affordable option. Get continuous access, including your credit score and what affects it, to the data on your study. You can pay 90% less than it would cost you through the business CRA’s through visiting: creditsuite.com/business-credit-monitoring. Use the data you obtain from credit monitoring to search for ways to construct your business credit and refute any errors. Give a thorough summary of what is wrong to the department and inform them what the right data is. Send in copies of all available support products and retain the originals.

Recap

The Small Business Financial Exchange is a not-for-profit enterprise that gathers business data. To get access to more business data, members of the SBFE exchange information. To help its members make informed credit and lending decisions, the SBFE offers risk items. The three big business CRAs are certified members of the SBFE. The SBFE will help you build business credit, but if there are derogatories on your credit report, it can also hurt you. Doing business with SBFE members assures your payments are being reported. If you loan money, information from the SBFE can help keep you from making poor lending decisions.

Business Funding and Grants for Minority Entrepreneurs

Life has changed drastically in a short period of time due to COVID-19, and small business owners have been hit the hardest by the pandemic. As the economic landscape is constantly evolving, small businesses still need funding more than ever, especially those owned by minorities. Minority business owners are at a bigger disadvantage when applying for loans, but there are still plenty of unique funding options available.

Challenges Minority Business Owners Face

Lower Net Worth
In general, the level of wealth for Latino and African Americans is 11 to 16 times less than for Caucasians. White business owners typically have more working capital when they start their businesses.

Lack of Collateral
For the most part, banks are not as likely to approve loans to applicants with less collateral to use against a loan. Lower net worth means less home ownership and fewer high-value assets to sell if a loan goes into default. This combination of less security and net worth means that banks will likely issue smaller loans that need to be paid back quickly., if they issue loans at all.

Poor Location
Businesses owned by minorities in locations that have not traditionally supported new business are not likely to get funding. This could also be an issue for anyone trying for a loan for a business in a poor location.

Little to No Credit History
Credit is a huge factor for banks when considering loans applications. Minority business owners tend to have lower credit scores when starting a business. Banks and other traditional lenders are also more likely to want to do business with entrepreneurs who they already know.

Small Business Grants for Women

Amber Grants for Women: ambergrantsforwomen.com/get-an-amber-grant/apply-now
The Amber Grant provides $4,000 monthly for qualified female entrepreneurs. The Amber Grant has a monthly application which requires the owner to share the story of how their business was created. The application fee is $15 and automatically enters the owner into a $25,000 grant at the end of the year.

The Cartier Women’s Initiative Award: cartierwomensinitiative.com
The Cartier Women’s Initiative Award is designed for women running early-stage companies for approximately two to three years. Early stage business refers to a business that has not made profits and revenue yet, or the business may still be a concept. The project must be an entirely original for-profit business creation, wholly conceived by the team. The business also must be incorporated in order to get approved. The project leader must be a woman in the capacity of Founder, Director General Manager, or Project Leader, and the main shareholder, CEO, or Chairman must be a woman in order to get approved. Up to two co-founders will be accepted, provided they are both women, and they will be expected to represent their project to the CWIA throughout the awards. Seven laureates from each region will receive $100,000, and the fourteen finalists will each receive $30,000 in prize money. A standard business needs $10,000 to get their business off the ground, so this is an amazing opportunity to affordably get your business started.

Grameen: grameenamerica.org/program
Grameen offers microloans specifically for women, which range from $2,000 to $15,000. Grameen also offers financial training and support programs for free. The company reports payments to Equifax and Experian. These loans help borrowers build credit, and Grameen boasts a 99% repayment rate.

Small Business Funding for Native American Entrepreneurs

First Nations Development Institute: firstnations.com/grantmaking
The mission of the First Nations Development Institute is to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans. This organization helps with the application process in addition to providing funds. Currently, there are no open grants opportunities for this year, but that could change in the near future. For the latest information, visit their website.

Rural Business Development Grants
Rural Business Development Grants for Native Tribes offers technical assistance and training as well as funding for small rural businesses. Federally-recognized tribes are eligible and opportunity grants are limited to up to 10 percent of the total company’s annual funding.

Small Business Funding for African American Entrepreneurs

National Black MBA Association Scale-Up Pitch Challenge: nbmbaa.org/scale-up-pitch-challenge
The purpose of the National Black MBA Association Scale-Up Pitch Challenge is to help newer businesses that have an African founder who maintains equal ownership. The grand prize is $50,000, second prize is $10,000, third prize is $1,500, and the people’s choice prize is $1,000.

The Lemon-AID Foundation: marcuslemonis.com/lemon-aid-foundation
The foundation offers help to underserved communities and small businesses through the form of loans and equity investments. The foundation also intends to make grants to other charitable organizations with similar goals and missions. Entrepreneurs will be required to know their business well and be prepared to share numbers and prove why they qualify for Lemon-AID when applying.

Small Business Funding for Latino Entrepreneurs

Camino Financial: caminofinancial.com
Camino Financial specializes in loaning to Latinx-owned businesses. This organization offers awards up to $400,000. Camino Financial also offers instant quotes and funding within 24 hours.

Small Business Funding for Members of all Minorities

Union Bank: unionbank.com/business/lending/diversity-lending
Union Bank is one of only a few banks in the country to have a special purpose credit program under the Equal Credit Opportunity Act. Their Business Diversity lending Program is meant to empower women, minority, and veteran owned businesses. Union Bank’s products are meant for small businesses that are looking for loans of up to $2.5 million. To qualify, your business cannot have annual sales of over $20 million. Union Bank offers fixed rate, unsecured or secured term loans with terms of up to 7 years for UCC- and equipment-secured loans. Loans for up to 25 years for owner-occupied commercial real estate financing. Variable-rate, unsecured, or secured lines of credit subject to annual renewal. Get fixed-rate, unsecured or secured term loan with terms of up to 7 years for UCC- and equipment-secured loans. You can also get certification through them. Certification as a Woman Business Enterprise (WBE), Veteran Business Enterprise (VBE), or Minority Business Enterprise (MBE) may lead to government or large corporation contracts. If your company is privately held and at least 51% owned by a woman, verteran, or minority who is a U.S. citizen or legal resident, you can apply for WBE or MBE certification.

Accion: https://www.accion.org
Accion has a microlending program meant to target low to moderate income business owners who are having a hard time accessing capital through traditional channels. Member organizations offer small business loans from $300,000 to $1,000,000. Funding is for pre existing businesses and startups. You can use the loan money for: Buying inventory; Buying or leasing equipment; Professional expenses, Hiring employees, and financing any expenses involved with being an entrepreneur. To qualify for a loan, you must: Be no more than 30 days late on any bills, loans, credit cards, or any other payment. If you are late, the total balance must be under $3,000; Not have any mortgage-rate adjustments due during the term of the loan; Not have declared bankruptcy in the past 12 months; Not have had any late rent or mortgage payments in the past 12 months; and not have gone through foreclosure in the past 24 months. Startups must have less than $3,000 in past-due debt, present two most recent pay stubs, a business plan with a 12 month cash flow projection, and a partner referral, such as SCORE or SBDC.


National Minority Supplier Development Council: bcfcapital.com/borrowers
This is a non-profit corporate membership organization that supports minority-owned businesses. The NMSDC has a grant program called the Business Consortium Fund, which is intended to support certified minority-owned businesses.

Backstage Capital: http://backstaecapital.com/apply/
This is a venture capital fund. Backstage Capital invests in businesses owned by women, people of color, and the LGBTQ community. Backstage Capital’s Entrepreneur Investment applications are viewed on a rolling basis. They have invested in more than 150 companies led by underrepresented founders.

The Foundation for Business Equity: fbequity.org
The Business Equity Initiative supports and provides funding for Black and Lantino Business owners. During the COVID-19 outbreak and current economic conditions, they provided an emergency fund to Black and Latino businesses in Massachusetts. This organization also works with economic partners on loan payment deferrals.

The Local Initiatives Support Corporation (ILSC): https://www.lisc.org/covid-19/small-business-assistance/resources/
ILSC is a non-profit organization that aims to revitalize communities in need through their programs. They support African American and minority-owned businesses across the country through its Small Business Relief grant program. They also offer mentorship and support services for small businesses by state.

Government Minority Grants

SBA Community Advantage Loans: sba.gov/funding-programs/loans
SBA Community Advantage Loans for Members of All Minorities is designed for small business owners who might not qualify for traditional financing. This organization encourages local, mission-based lenders like nonprofit organizations to make loans of up to $250,000. The SBA guarantees up to 85% of the loan and the interest is prime+6%. This is a good option for minority entrepreneurs who need a large amount of capital.

SBA Bailout Funding Under the CARES Act: congress.gov/bill/116th-congress/senate-bill/3548
SBA Bailout Funding under the CARES Act for all entrepreneurs addresses economic impacts of the COVID-19 outbreak. The bill authorizes emergency loans to distressed businesses. The bill establishes and provides funding for, forgivable bridge loans and provides additional funding for grants and technical assistance. Congress is currently discussing whether to add more money to the program.

Community Connect Grants: rd.usda.gov/programs-services/community-connect-grants
For entrepreneurs living in or operating businesses in rural areas without internet broadband speed of 10 Mbps or more, this Department of Agriculture grant can be used to help fix that.

Kiva: https://www.kiva.org/borrow
Kiva is not just for minority entrepreneurs. Their mission is to provide business capital to underserved communities. Loans are crowdfunded in increments of $25. These loans are offered for 0% interest, for up to $10,000. Borrowers can market their goods or services to over 1.6 million lenders around the globe.

NIH Small Business Innovation Research (SBIR):
SBIR is a government initiative related to the Small Business Technology Transfer (SBTT). One goal of SBIR and STTR programs is encouraging innovation and entrepreneurship by socially and economically disadvantaged and women-owned small businesses. Eleven eligible government agencies must set aside some of their budgets so domestic businesses can engage in R&D with a strong potential for technological commercialization. Participating agencies include:

The Agriculture Department; The Commerce Department’s National Institute of Standards & Technology; Defense Department; Education Department; Department of Health and Human Services; Homeland Security; Transportation Department; Environmental Protection Agency; NASA; and the National Science Foundation.

Recap

Entrepreneurs who are members of minority groups can have trouble getting the funding they need, but there are tons of unique options for females, Native Americans, African Americans, and Latino business owners.

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