Almost all business loans are now coming from Alternative Lenders. So, you can often get approved with an alternative lending source when you can’t with your bank and even when you think there’s NO WAY you’ll get approved!
Alternative lending options now mean you can get approved for a business loan even if:
- You have REALLY bad personal credit, you have no business credit or you don’t have any types of collateral
- You are just starting a business, you don’t have tax returns… or your returns aren’t good and you have limited or no cash flow.
The key to getting approved is to know what lenders are looking for to issue you an approval. This way, you can meet their requirements before you apply. And you need to know the types of financing available to know what to apply for.
All credit issuers and lenders have requirements you must meet to get approved for a business loan. If you meet these requirements, you can often get approved automatically without a manual review. Even with a manual review, by knowing what these secret requirements are… you can meet or exceed them before you apply, almost guaranteeing your APPROVAL.
But how can you meet these requirements? Here are some tips to get your business loan:
You should setup a business name that is neutral, and not in a high-risk industry. If you do have a name that indicates you are in a high-risk industry, you can be declined.
Getting a business loan with any entity but choosing a LLC or Corporation will mean that you and your business are truly separate… which limits your liability. Make sure you setup your bank account as well. Setup items such as your bank account, EIN, and D-U-N-S number will often require your SSN or real physical address.
Your business should have an address and it should NOT be a home address. It should be a real physical address, a real location. If you don’t have that, get a virtual address. If you don’t want to do that, as a last resort use a UPS type address… not a P.O. box.
You need a business phone number. This can NOT be a home or cell phone number. It CAN be a VOIP number. You should also have a local phone number and that number should be listed with 411. You should also have a fax number.
You need a professional website and email. You can get your domain and email from a place like Go Daddy for less than $12. Hosting your website is also super affordable. You can also get a website template from a place like http://www.templatemonster.com and hire someone to put it up at a place like https://www.upwork.com.
Make sure you have your proper licensing for your county, state, and your industry and make sure you are listed correctly online. Also make sure all of your documents and listings are congruent.
Once you’ve made sure that the information you’ll put on your application is “credible” in the lender’s eyes it’s time to find the right financing for your business. To do this you’ll need to determine if you have a lendable strength. A lendable strength is usually one of the 3 Cs of Lending you’ll see on the upcoming slides. The more lendable strengths you have… the more funding options you’ll have!
Is your Cash Flow over $10,000 monthly? Can it be verified by either bank statements or tax returns? Have you been in business 1 year or longer? If you have consistent deposits in your business bank account you may qualify for revenue financing. You can get $5,000- $500,000 in funding quickly… even in less than 48 hours. All that’s required is a bank statement review. To get approved you should have one year in business and you should have $10,000 or more in monthly deposits. You can also get approved if you don’t have one of these but you do have compensating factors.
Is your personal credit over 700 score? Do you have ANYONE who can sign for you as a personal guarantor… knowing the credit you can get will NOT report on their personal credit? Do you have average credit BUT you have cash flow verifiable per your tax returns? Unsecured financing provides some of the highest loan amounts… even for startups. You can get 0% business credit cards with stated income, no financials required. These report to the business reporting agencies so you can build business credit at the same time… getting you access to even more money without a personal guarantee.
You can usually get leant 5 times the amount of your highest revolving credit limit account now… up to $150,000. This is the HIGHEST amount of financing you’ll typically ever see for a startup. This is easily 5 times what you could get on your own when applying for cards. There is NO impact on your personal credit when you use this type of financing. You’ll need to have a 700 credit score or guarantor with good credit to get approved.
If you have average credit or better and do have tax returns you can get some type of alternative SBA loan. These types of financing have longer terms and lower rates… as low as 8% and as long as 3 years. This helps keep payments low. Your tax returns should show a profit.
Collateral... Do you have some type of viable personal or business collateral? Do you know someone who does who wants to help you or your business?
ALWAYS check with friends and family if you have none of these. This is because they may want to invest in your business… and you can use their credit or collateral to do so. Maybe you can then exchange equity for their contribution.
If you have none of these strengths, and nobody who will help you, there are still options for you. Business credit is where you can obtain HIGH limit credit cards quickly regardless of collateral, cash flow, or credit. Business credit is a brilliant solution for startup businesses and those who can’t get other loans. This is credit that’s linked to your EIN not your SSN.
This credit is available without a personal guarantee and regardless of personal credit. And, you can get business credit IMMEDIATELY even as a startup. You’ll start by getting initial vendor credit immediately who offers services and products you’ll need to start your business. For example, you can get credit for office and shipping supplies with limits of $250-2,500 right away. These vendors report to the business reporting agencies within 60 days helping you build your business credit profile and score.
Business credit is the BEST way you can get money for a business if you don’t have collateral, cash flow, and good personal credit or a guarantor.
Other business credit benefits to consider are anyone can see your business credit reports. It’s essential for qualifying for loans. You can get HIGH limit accounts quickly. No personal guarantee or credit check and one of the FASTEST ways to get money beyond immediate funding.
Crowd funding is also an awesome way to get money by posting your project and having the “crowd” contribute money to your campaign to get the money you’ll need to line up investors first who are ready to contribute once the project goes live. Your project might go viral attracting lots of new contributors.