CHANCES FOR BUSINESS LOAN APPROVAL
THREE STEPS TO MAXIMIZE CHANCES FOR BUSINESS LOAN APPROVAL
If you are thinking about getting a business loan, there are three steps you must take that will maximize your chance of approval. Lenders want to applicants to have at least ONE of the three Cs — that is, cash flow, collateral (assets), and credit (personal and/or business) — in order to issue an approval for a business loan. The more of the three Cs you have, the more funding options you will have available. In other words, you have fundability. Eighty percent of business loan applications result in denials. By following these steps, however, you can increase your chances of approval.
Choose your business name and NAICS code carefully.
If you are concerned that the name of your business may cause credit reporting bureaus to consider it high-risk, you can change its name. However, if you do so, ensure you change it everywhere – incorporation documents, licenses, web site, and records with business credit reporting agencies Dun & Bradstreet, Experian and Equifax. Be sure the business information is the same at each place by copying and pasting instead of typing it out. This helps prevent errors.
Know your NAICS code, as it will identify your industry and the risk factor associated with it. When choosing the NAICS code, if there is more than one that could identify your business, choose the least risky one. Use this code on ALL YOUR INFORMATION. The NAICS code can indicate a high-risk business to lenders, banks, insurance companies, etc. The wrong choice of NAICS can automatically result in higher premiums, reduced credit limits, more stringent underwriting, or even flat-out credit denials, so choose your NAICS wisely.
Establish your business entity type and EIN
Set up your business information
Use a real brick & mortar building, one that is deliverable, as your business address. Do NOT use your home address, a PO Box, or a UPS mailing address. Set up a professional web site which has all your information. Do NOT use your home phone or personal cell phone number as your business line. The phone number should be toll-free and listed with 411. Be sure your all your information is accurate on your business record. (If you don’t have a business record, you can establish one on ListYourself.net.) Not following these recommendations can lead to credit application denials.
Corporations should have proper business licensing. Ensure the address on the license matches all other business documents. Contact state, county, and city government offices to find out if there are any licenses/permits required to operate your business.
The business web site and e-mail address should be professional looking. Do NOT use Yahoo, Gmail, etc. but rather a streamlined address (example: firstname.lastname@example.org) which is on the same domain as your site (such as GoDaddy).