A Proven System for Financial Credibility

4/16/2011

2 Comments

 
A Proven System for Financial CredibilityToday there are approximately 26.5 million small businesses in the United States – and over 92% of these businesses leverage personal credit and business credit in their business. Investment capital and trade credit is the lifeblood of a business and as a result small businesses are dependent on their personal credit score! “The dependency on personal credit is the primary factor of why most small businesses fail.”

  • 92% of ALL businesses mix personal and business credit
  • 50% of businesses fail in the first 3 years due to lack of access to capital

Most banks and business lending institutions have a 20 item check list that they look at before they ever get to look at your financials.

Did you know to be approved for business financing your business needs...

  • 1. Strong business credit scores with all 3-business credit agencies.
  • 2. A business bank account that has at least a low 5-bank rating.
  • 3. Articles of Incorporation or LLC formation current in your State.
  • 4. Your business legal name needs to be found in the 411 Directory.
And there are 16 more that you will not have to worry about because they are all covered in Step 1 of our comprehensive system.


Getting your business into compliance for almost all business lenders is easy if you know what you are doing. You will know exactly what to do. We have created the most comprehensive system that will assist you in making sure that you have all 20 items completed before you apply for business financing. We will guide you step by step to become lender compliant and building strong business credit scores with Dun & Bradstreet, Experian, and Equifax. Then we help your business obtain the financing it needs to succeed.


Don’t Delay Any Longer ...Key Mistakes Business Owners Make in Funding Their own Business.
  • Not building business and financial credibility
  • Contaminating personal credit and business credit
  • Investing personal credit and cash into the business without reporting to credit agencies
  • Using personal credit cards, cash, line of credit, etc. to pay business expenses
  • Spending money on vendors without building trade credit lines
  • Creating personal liability by pledging personal assets and not utilizing corporate credit
  • Not paying your bills on time
  • Managing credit as a liability vs. a credit asset
2 Comments
Mary Ellen Digiacomo
6/30/2011 11:36:07 am

Small businesses expected 2011 to be the moment a years-long credit freeze would finally begin to thaw. But borrowing has only gotten worse.

Loans outstanding to small businesses totaled $609 billion at the end of March, an 8.6% drop from a year earlier, according to the most recent data from the Federal Deposit Insurance Corporation, which analyzes loans of less than $1 million.

Another lending analysis, by the Federal Reserve Bank of Kansas City, shows that big banks' outstanding loans to small businesses dropped 14% between March 2010 and March 2011, while loans by smaller lenders fell 3%.
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John S. Dykes
Credit John S. Dykes

Business owners rank access to capital as the most important issue facing privately held companies, according to a poll of 1,221 entrepreneurs released this month by Pepperdine University. In the past six months, only 17% of loan-seeking businesses with less than $5 million in annual revenue landed bank financing, the study found.

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"This area of the economy is in such crisis," says John K. Paglia, a finance professor and senior researcher for Pepperdine's report. The lack of credit "is improperly penalizing companies that will be very successful down the road."

The situation is also quite different for larger companies. About 37% of respondents from privately held companies with revenue greater than $25 million have successfully secured bank loans in the last six months, according to the Pepperdine study.
The numbers for smaller businesses also stand in sharp contrast to what had appeared to be a recent rebound in lending.

Last summer, after years of tightening standards, a majority of banks reported they had eased underwriting criteria for small businesses, according to a quarterly survey of loan officers from the Federal Reserve. In the 2011 first quarter, a majority reported stronger loan demand from small firms, reversing a multiyear trend.
But most of the loan recipients appear to be the largest of independent businesses—such as those with multiple revenue streams and ample loan collateral—rather than smaller companies. Commercial and industrial lending, an indicator of business-loan demand, totaled $1.26 trillion in May, up 3% from a year ago, according to the Federal Reserve.

However, March data from the FDIC shows that commercial and industrial loans of less than $1 million, which are generally issued to small firms, dropped 10% from a year earlier. Rick Kimsey, 57 years old, is seeking to expand his business, a medical-clinic franchise called Doctors Express Urgent Care, but since January six banks have rejected his loan requests. Mr. Kimsey says the business, open since late 2010, has done well enough for him to sign with the franchisor to open six new locations. The loan applications haven't passed muster, he says, because he rents office space in Sarasota, Fla., and doesn't have real-estate collateral.

Discouraged by the bank process, Mr. Kimsey says he has learned to "have a contingency plan in place" and is now trying to secure capital from a private investor. For their part, banks say that they are trying to comply with federal regulators, who want to ensure that the financial collapse—in part caused by lenient underwriting—doesn't happen again.

"It's a misnomer that we don't want to make small-business loans," says Paul Merski, senior vice president of the Independent Community Bankers of America, a lobbying group in Washington, D.C. "The role of banks is to take on risk. That's how banks survive. That's how banks make money."

The main issue facing lenders, Mr. Merski says, is that regulators are asking for proof that the loans will be repaid. That can be tricky with smaller, historically riskier businesses, particularly in an uncertain economy where property—often used as collateral for loans—keeps falling in value.

Further, he says, regulators are requiring banks to hold more capital in case loans default, leaving them with less to lend. Indeed, according to the Pepperdine study, more than three-quarters of bankers said they felt increased pressure from regulators, and 61% of those bankers reported that they have rejected loans they otherwise would have made to please the federal overseers.

That's hampering many small-business owners' plans for growth. John E. Durante of Durante Rentals LLC, a Bronx, N.Y., construction-equipment rental company, got a $45,000 credit line two months ago. But it's far from what he ultimately needs.

Last year, five banks turned him down for a $1 million loan he sought to buy construction equipment.
Without the loan, Mr. Durante was forced to rent the machinery. "My competitors made $300,000 off of me because I couldn't get financing," says Mr. Durante, whose business had $2.4 million in 2010 sales and is on track to top $3 million this year. "That broke my heart."

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1/17/2013 05:03:07 pm

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