George Dooley  

Archived Blog Post

Date / Time: 10/10/2008 1:23 PM UTC

Unsecured Business Loans and Lines of Credit Are Still Available - If you know how to apply

Even in today's economic climate, Stated Income, No Doc, Unsecured Business Lines of Credit are still available.

Have you every been - TURNED DOWN, TURNED OFF or TURNED AWAY by financial institutions as you looked for Unsecured Business Loans or Business Lines of Credit?  Unfortunately that situation is too common in America today. However that doesn't have to be the case.

In today's economic environment it’s imperative that a business owner present lenders with a thorough Application Package that makes the lender eager to submit it to underwriting.

Here are ten secrets we at TheSmallBusinessMoneyStore.com have learned that help us get Stated Income, No Doc, Unsecured Business Lines Of Credit for our clients:

1. Enhance your credit worthiness... In today’s economic climate the business owner (loan guarantor) must have a personal FICO score of at least 700 in order to be considered for any unsecured credit. Even with a 700 FICO, any blemishes that appear on a credit report should be corrected in order to improve the score. For a more detailed understanding of your credit score check out: www.TheSmallBusinessMoneyStore.com/FICO.pdf
2. Improve your Debt To income Ratio (DTI) Before you apply for any financial product, an unsecured business line of credit, a loan or a credit card; identify hidden assets you didn't even know you had. Often times business owners overlook the value of benefits such as cell phones, internet access, business paid insurance policies, business travel and attendance at conventions. Each can add up to substantial additional income. Aim for a DTI below 40%.
3. Indentify the "deal killers" on your credit report.  Little things, such as the number of recent inquiries can quickly kill any application. If you have more than three to five inquiries within the last six months work with the credit bureau to have them removed if possible.
4. Prevent your application package from raising "Red Flags" when it's reviewed by the "Sales Prevention Team" (underwriting). In today’s lending climate, underwriters are looking for any reason to decline an application. Sample “Red Flags”:
   1. A business WITHOUT a BUSINESS checking account
   2. A business without an EIN (Employer Identification Number)
   3. Providing a “Suite” or PMB (Personal Mail Box) as a physical address of your business on an application. 
   4. A negative reference to your business on the Internet
   5. The name of the business owner not being referenced in either the Articles of Incorporation or Operating Agreement (LLC).
5. State your company's true numbers... If your businesses actual net is a minus number save your time. A bank will not lend to a company that doesn’t have the cash flow to repay. When stating business assets don’t forget to include Accounts Receivable, interest received on deposit funds and the value of the business’ office machinery and office equipment.
6. Assemble a complete loan application package... not just the application - all the supporting documentation that supports a successful application. The US Patriot Act requires lenders know their client and verify to whom they are lending money.  Support your application with copies of
   1.  Two forms of government issued ID (a social security card is NOT acceptable) however a copy of a credit card with all but the last four numbers showing IS – go figure.
   2. Secretary Of State website summary page for your corporation (or LLC) indicating your entity is active and in good standing
   3. IRS form SS4 showing your EIN number
   4. Your Articles of Incorporation or for an LLC – Operating Agreement
   5. Copies of utility bills placing the business at its physical location and the business owner at their home address.
7. Calculate the realistic amount you might expect with an Unsecured Business Line of Credit of Business Loan... You may want $500,000 however; your business may qualify for only $5,000. Lenders are more likely to approve applications with realistic expectations. 10 – 20% of Annual Gross Sales (or Revenues) is a realistic expectation.
8. Increase existing Unsecured Business Loans or Lines Of Credit... no need to apply for a new line of credit if your present trade line can be increased. Approach your current banker with a copy of your current business financials and request that your current line be expanded. If you have a good track record of usage and repayment many lenders, even in today’s market, will increase you line.
9. Reduce current business loan rates... paying too much on existing unsecured lines of credit?  It may be possible to reduce the current interest rate your paying. This may sound crazy in today’s credit crunch environment; however, you can ask your lender for a lower rate. Research the interest rates of your bank’s local competitors and explain that you’re shopping your business banking relationship.
10. Use the equity in your home for your business without it showing on YOUR credit report... let the business carry the debt! A HELOC (Home Equity Line of Credit) has long been a favorite funding source for Small Business owners. Unfortunately this practice ultimately will hurt the business owner’s ability to obtain credit in order to purchase much needed personal items such as a care or fund a college education. A number of banks now offer a product referred to as either a BEL or BELOC (Business Equity line of Credit). It’s a HELOC that is used for the business and thus carried under the EIN of the business and not the SSN of the home owner.

Am I saying that if you follow these simple proven strategies that all of your financial woes will be solved overnight? No, of course not.

There’s NO magic formula to having lenders approve every application for an Unsecured Business Loan or Business Line of Credit. And there will never be.

But what I am saying is every day, even in this tight credit market; we use these strategies to have Unsecured Business Line of Credit applications approved for our clients!

Go to www.TheSmallBusinessMoneyStore.com now to see why clients trust us to get them the funding they need for their business.

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