No Guarantor Loans For Business
Business loans, similarly to personal loans, have been increasingly difficult to get lately. Despite the difficulties, unsecured loans for business remain to be very attractive as they offer great advantages that personal loans do not. The reason for most rejections is the approach taken by a business owner. Proper understanding of how business lending works, including the criteria banks and other lenders use, may help greatly in making successful business loan applications.
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The most important factor that is considered by lenders is corporate credit. Like individuals, companies have their own credit reports and credit scores.
Build Your Corporate Profile First
The first fundamental step is to build a corporate credit profile with three major business credit reporting agencies: Dunn and Bradstreet, Experian, and Equifax. Once a basic profile is established with all three, it is time to start applying for loans and lines of credit. Getting a line of credit from a vendor or obtaining a loan from a bank does not guarantee it being reported on your corporate profile. With thousands of lenders in the marketplace today, there are very few that would report your information to business credit bureaus. Therefore, it is important to borrow from lenders who do, ensuring positive credit reporting on your corporate profile. A profound research is required in order to find lenders who would extend credit to you, since you have no history yet, and who would report your timely payments to credit bureaus, building your corporate credit history.
It is obvious that banks are more eager to finance businesses that have an established non guarantor loans than the ones that have poor history or no corporate credit at all. Unlike personal credit profile, corporate credit needs more work to be established.
Most make a mistake of applying for loans that only well-established businesses with proven payment track are able to get. Alike to personal credit reporting, credit inquiries count against you, so it is important to apply with lenders that feature high approval rates. Once you have opened a small account or two that have been reported to corporate credit bureaus, it is time to do the next step – getting a corporate credit card. It does not matter whether you get a Visa, MasterCard, or a store credit card – your goal is to ensure that your corporate credit profile can boast a revolving account listed that is paid on time.
Once your corporate credit profile is established and you have a number of vendor accounts as well as an unsecured credit line listed, it is time to let your business get prepared for more serious financing. There should be a timely history of several payments on each of your accounts reported to business credit reporting agencies, before you may move on to the next level. Many business owners make a mistake of being impatient, trying to apply for large unsecured loans and lines of credit without letting their credit history properly age. Therefore, be patient.
Apply At the Right Time and Enjoy Corporate Credit Privileges
After 6 months of making timely payments on all your accounts, check your credit profiles and scores. If your Paydex score is over 70, it may be the right time to apply for a larger loan. Most corporate loans are granted based on credit history of your business and its ability to repay, regardless of your personal credit. This provides for a great opportunity to have access to cost-effective financing without putting your personal credit at risk.