10 Biggest Mistakes Business Owners Make When Applying for Business Credit
Take a few minutes to read this or call us before you even think about submitting any business loan application. It can — and it will — make all the difference.
As you read the information we have outlined below on the 10 biggest mistakes business owners make when applying for business credit, keep the following in mind. When you are finished reading this you will be armed with more business loan knowledge than 97% of all business owners.
We do advise caution however — there is much more to the loan process than we will outline. If you make any mistake(s) in laying the necessary initial groundwork and/or your advance loan application preparations, most likely your loan application will be rejected.
Like we've said before, the business loan application and approval process is not rocket science, but there are a lot of moving parts and steps that need to be taken — and should you miss even one? You will not be funded.
Not only will you not be funded initially, but you and your company will remain "flagged" in the banking system computers for up to 6 months. Any future loan applications to most banks will be rejected and you will not be given any explanation for the turn down.
Four Stages of Competence
Information can only be useful when it is used. It can only be used when it has been fully digested and internalized, when you "don't have to think about it."
Unconscious Incompetence
You don't know that you don't know.
Conscious Incompetence
You realize that you know you don't know.
Conscious Competence
You know that you know, but you must consciously think it through.
Unconscious Competence
It's second nature. The information is part of you — fully internalized and automatic.
The 10 Biggest Mistakes
These are the "10 biggest mistakes made when applying for business credit" — not a complete step-by-step blueprint, but the critical errors that sink most applications.
Not being incorporated
Did you know that banks historically make faster decisions and grant larger loan amounts to businesses that are incorporated? It's true. Many small business owners operate their day-to-day business under a d.b.a. or "doing business as." While this is a fast and simple filing with your local county recorder, lenders consider businesses operating under this structure as "small." Not only does this limit the amount of funding, but operating under a d.b.a. is filled with perils. Enough said.
Corporation is too new
Did you know that your loan application will most probably be denied unless your corporation is at least three (3) years old? It's true. A new corporation signals the bank "no experience." While I've heard of businesses being approved for small $5,000.00 business credit cards on occasion, I've heard many more sad and sorry tales of business loan applicants being handed their hat and a rejection notice. We advise our clients to purchase a seasoned corporation that is at least three (3) plus years old. Call our experts today at 323.648.5232 to discuss your specific needs and request our current list of aged/seasoned corporations. We have corporations available for immediate delivery that can fill most needs.
Corporation is suspended
Verify your corporation is in good standing with the Secretary of State and is not nor has it been suspended for longer than 6 months. Make certain your Registered Agent fees and your State Franchise Tax fees if any, are paid and are in good standing. Your potential lender(s) will verify the status of your corporation right out of the gate and if your status is not right? They will immediately reject your loan applications.
Corporation not registered in your state to do business
Regardless of the state of incorporation you must register your corporation with your Secretary of State. It's easy and fast and it must be done prior to submitting your loan applications.
No brick and mortar business address
So many first-time business loan applicants make this mistake. You must have a physical business address in an established business district. Bank computer programs can immediately identify residential address districts and flag your application. When you apply for a business loan and use your home address also as your business address it sends the lender a "small business" signal. Home business equates to a "small time operator here" which will get you a fast loan rejection or, best case scenario, a small loan usually under $50,000.00.
No business telephone number
Not having a 411 directory assistance listed business telephone number is one of the biggest mistakes people make when applying for a business loan. If your business is legitimate and you want to get qualified for a business loan, make the investment in a Monday through Friday 9-5 live answered business telephone. That means no dogs barking, televisions playing and/or babies crying in the background.
No business website
Today one of the new lending guidelines requires the lending underwriter to verify the business applicant has a website. It should be no less than 3 pages with 5 pages preferred and the information on this website must be accurate, it must be up to date and all the page links must work.
No Business Experian or Dunn and Bradstreet file
When you apply for a bank or traditional line of credit or almost any vendor credit for that matter, your potential lender will check your company payment history with Dunn & Bradstreet. Screw the guys who try to sell you their paid trade lines, or want to add anything that you know (and don't get cute here, you know who you are and you'll only hurt yourself trying to take this shortcut) is fishy. Contrary to popular opinion, you do not need a Paydex score to get your company funded. You do need an updated legitimate Dunn & Bradstreet business credit profile. You've got to get this right or you're wasting your time and money applying for business funding. Questions? Call us first. Enough said here.
No Credit Qualified Officer(s) on Company Board of Directors
We can't emphasize this enough. If you want real money, loans and/or lines of credit, someone on your corporation Board of Directors must be able to demonstrate financial responsibility to the lender(s). These loan officers know the game better than you or I and they know a company is only as good as the person(s) who are steering it. All lenders want to see someone on your board of directors who has a mid-fico score of at least 700. This person must also be ready, willing and able to personally guarantee any loan(s) made to their company for at least the first twelve (12) months. In addition to their personal credit score there are several other factors like their personal debt to credit ratio, the depth of the report, type of credit lines reporting and length of credit history. There are several critical factors that must also be taken into consideration. You can send your consumer credit profile to Wilshire Financial Group, Inc. for a free, fast and confidential review. We can tell you quickly if you or your potential credit partner is qualified. If not, we have very well qualified CFO/Director candidates who will sit on your Board of Directors for a negotiated percentage and help your company obtain funding.
Not calling Wilshire Financial first
We are seasoned corporate credit professionals. Our aged and bank seasoned corporations are expertly engineered to exceed all regional and national underwriting requirements. Our products and supporting start-to-finish hands-on funding services produce consistent, self-authenticating, verifiable, and definitive results. In Beverly Hills in the same location now in our 12th year, Wilshire Financial Group, Inc. is an extremely successful, established company in a highly specialized area of expertise. With our corporate clients receiving millions of dollars in business loans each year we are very familiar with the pitfalls, the false alarms, and the "fools gold" in our specific discipline and don't make mistakes. In our office and on the floor we have book keepers, a payroll agent, business and personal tax preparers, a California Notary Public, a CPA Certified Public Accountant, an EA Enrolled IRS Agent, two (2) California tax attorneys, live telephone operators and mail services. Our staff is comprised of professionals who are experts at building corporate structures for the sole purpose of establishing credibility, stability and ultimately very significant funding. If you're tired of wasting time and money and want to get your business funded fast, call us today at 323-648-5232 for a free consultation. Our reputation speaks for itself and 100% of all clients we submit into funding get approved. That's the bottom line!
Ready to Get Funded?
When you go through the process step-by-step with us, over a period of time you will reach the fourth stage of competence. When you do, the world is your oyster. You will never again be turned down for a business line of credit, or any business loan for that matter.