Unleash the power of Fundability. What is Fundability? Fundability is
your business's ability to get funding. You can make it harder or easier for
your business to get money. A lot of the power is in your hands.
Every business should build for fundability, a business starts with no credit
profile. Therefore, what's on your application is
all that's reviewed for approvals. So your application must be very strong.
Most companies fail in their first year. Half of all companies fail in their
first five years and two thirds in the first 10. As a result, new businesses
don't seem fundable to lenders. Let's look at your industry. The first
step in Fundability is your businesses industry. Some industries are considered
more risky than others when it comes to traditional funding sources. Added risk
can mean stricter underwriting guidelines or even no funding at all.
Let's look at your business name. Check with your Secretary of State. They might
require that a business name be unique. Keep the name of a high risk or
restricted industry out of your business name Chicos Bail bonds can be renamed
as Chicos. This is above board and honest. A full business name should include any
recorded DBA filling you use. Let's look at your business address. A
business address must be a real brick and mortar building. It must be
deliverable physical address. This can never be a home address or a P.O. Box.
Don't use UPS mailing addresses. Some lenders will not approve and fund unless
this criterion is met. Lenders will check USPS in places like
Google Maps to see if you're using a home address if you are you often get an
immediate decline. Never use a home address on your application. Not even
if your company is just you. You can use a virtual address. We like Regus, DaVinci,
and Alliance. Let's look at your business, phone and
fax numbers and a 411 listing. You need a fax number or an eFax as well set it
to go straight to email. A cell or home phone number is your main business line
could get you flagged as an established, but VOIP is okay. You must have a
dedicated business phone number. Business phone and fax numbers must be listed on
411 via ListYourself.net. Your business phone number should be
toll-free. 800 exchange or a comparable. Let's look at your business bank account.
You must have a bank account devoted strictly to your business. This helps at
tax time. The IRS does not want you commingling funds. Make accounting easier and
reduce the risk of audit. Keep personal and business funds separate. The
simplest way to do this is with a separate account. The account opening
date is the businesses opening date. Far as lenders are concerned, a longer
history is better. Let's look at your business bank
accounts and your business financials. You always need to be looking to the
future. That future is bank and other loans and other kinds of funding. Set
your business up for bank loan approvals success. Keep a balance of $10,000 or
more for at least three months to get a low 5 bank rating. This way, most
conventional banks see your corporation as fundable. If you don't have a low 5,
you can still get corporate credit and alternative loans. But you would not be
able to get a conventional loan. Bank ratings measure how responsible the
account owner is with funds. Let's look at your time in business. A
company in business for a few months to a year has more options for funding.
Startups don't have tax returns to show lenders or too many other ways to show
profit and the responsible use of finances. This is another reason to open
your business bank account ASAP. That way, your time in business is as long as it
can possibly be. Let's look at your Business Entity and EIN.
Get a free EIN for your business at the IRS website to truly separate
business credit from personal credit. Your business must be a separate legal
entity, not a sole proprietor or partnership. A corporation or LLC
business entity gives you more credibility in many cases, these entities
by default, eliminate your personal liability other entities don't. Make sure
your entity is set up in the same state as your business address. Verify all
listings, show the same name, address, phone numbers, etcetera. As in state and other
records. Let's look at your SIC and NAICS codes,
the IRS website is also where you choose SIC and NAICS codes. Industries are
categorized by two kinds of codes SIC, Standard Industrial Classification
and NAICS, North American Industry Classification System you choose these
codes. Be honest when you choose yours. But there's no reason to choose the
riskiest code. If a less risky one might apply.
Let's look at your business website. Credit providers will research your
company online. It's best if they learn everything straight from your company
website. Not having either will undercut your business's fundability use places
like TemplateMonster.com and Upwork.com and get a site up cheap and fast. You
need a professional website. Buy a domain from a place like GoDaddy. Your domain
should be your business name if possible. Let's look at your business email. You
need a company email address for your business. This email must be on the same
domain as your website. Use a professional email address such as
yourname@yoursite.com. This usually comes with a website domain providers
such as GoDaddy. Do not use Yahoo, AOL, Gmail, Hotmail
or similar kinds of email. Let's look at your business licenses.
Contact State, County and City Government offices to see if there are any required
licenses and permits to operate your type of business. Do not apply for
funding if you are unlicensed. Verify that main agencies State, IRS, Bank and
411 National Directory have your business listed the same way and with
your exact legal name. Make sure every bill you get power bill, phone bill,
landlord, etc has the business name listed right and comes to the business
address. Get set up with the business credit
reporting agencies. Go to D&B's website and look for your business.
dnb.com/duns-number. Can't find it? Then get a free DUNS number. A DUNS
number is how D&B gets your company into their system to generate a Paydex Score.
A DUNS number plus payment experiences leads to a Paydex score. Once you're in
D&B's system, search Equifax and Experian's sites for your business. You can do so at
creditsuite.com/reports. Another ID number is the BIN number from
Experian. BIN stands for Business Identification Number. Experian's at BizSource
assigns a BIN. A business must be listed with the
reporting agencies. This is necessary to establish business credit. You can also
be denied funding if you don't have a credit score. You can also get a denial
with a low credit score with D&B, Experian or Equifax.
Let's look at your business and the Small Business Finance Exchange. The SBFE
is a business data agency, SBFE members have a give get relationship.
Members of the SBFE supply data related to credit issued by them, including
payment history. Certified vendors like Dun and Bradstreet, use this data to create
credit products. These products are for distribution of SBFE members only. This
is one data source used by Dun and Bradstreet.
Doing business with SBFE members ensures more complete information is
available for your business. Let's look at your business credit
history. Get the most favorable funding by paying all bills on time, this means
a Paydex Score of 80 and an Equifax credit risk score of 90 or better. A good FICO
SBSS score will be driven in part by on-time payments and business credit
history. For Experian historical behavior payment history accounts for 5 to 10
percent of total score. How well does your company pay its outstanding
invoices? How is your business's payment performance changed over time?
Let's look at your business information and congruency. Keep all records
consistent. CRA's and creditors look at everything. So it had better match or
you'll get a denial due to fraud. That's how lenders interpret inconsistencies.
Your business name, address, phone and fax number. All of your business information
must look the same in these places, like the IRS and Secretary of State records
business records with Dun and Bradstreet, Experian and Equifax and more when it
comes to your incorporation documents. Copy and paste this information do not
chance it with retyping. Let's look at your personal financials
and personal credit history. Personal credit quality is often helpful for
getting funding. So if personal credit is not an order, get it straightened out and
improve it. For a business loan at a conventional bank. You need good personal
business and bank credit. While you want to build good business credit. Having
good personal credit can get you started. Good personal credit will open doors and
it will open them earlier. Good personal credit is helpful. It's a
great way to get unsecured business funding these report to the business
CRA's, not the personal CRA's. You don't need proof of cash flow or collateral.
You don't need to fulfill a time and business requirement. They don't look or
care about cash flow. All that matters is personal credit. You need quality credit
with no derogatory reporting. Do you want to try for an SBA loan? Then you will
need to have good personal credit. Let's recap, take control of how likely
it is your business will get money, how fundable it is. Having a proper business
address, phone and fax numbers, website and email are vital. Setting up your
business with the IRS and getting an EIN and choosing a corporate entity are all
important. Get set up with the business CRA's so you can start building a record
and the best record comes from paying your bills on time. Your personal credit
quality and financials play a part and keep your records congruent. So lenders
can find out everything they need to know about your business.
Contact us today to learn more about how to unleash the power of Fundability.