Avoiding Common Business Loan Mistakes

Studies show that 94.7% of small business owners feel their only lending resources are local banks or personal credit card. This common sense advice will help you avoid these common business loan mistakes, regardless of your personal credit history ... and avoid pledging your personal property as collateral.

First and foremost, to obtain approval for a commercial loan is definitely easier than getting personal loans ... regardless of your personal credit score. In addition, given the right types of corporate credit is crucial: If you want to protect your personal assets, minimize risk of personal litigation affecting your business and your ability to cope with the economic changes taking place overnight.

All business owners must be much more proactive about developing relationships with the right types of lending institutions. You usually want to start your application process with out-of-state, national lenders ... not your local or regional banks. Domestic lenders typically will not require a personal guarantee or your social security number.

Follow this simple roadmap to get a small business startup loan, a business debt consolidation loan bad credit business loans, or a public enterprise loans ... although we strongly recommend that you find a loan expert who can help you through the process of building a strong corporate credit rating.

Finding a competent business loan expert will give you a head start on your competition and also lets you focus on running your day-to-day operations ... Rather than deal with the hassle of establishing a strong business credit. An excellent business credit score can help your company's image overnight. And find a small business loan expert is not so difficult. You just know where to look.

Now ... Let's get started ... Before you apply for any business loans!

1. How is your business structured? Is it a sole proprietorship, C Corporation, S Corporation, limited liability Corporation (LLC), Partnership, or Trust?

2. How long has your company been recognized by your State & Local Government?

3. Has your company ever had derogatory information reported against it to one of the two (2) most popular business credit reporting agencies, Dun and Bradstreet or Experian?

4. Are your commercial permits, licenses and registrations current?

5. Does your company have a physical address, or are you trying to use a U.S. Post Office Box instead?

6. Is your business telephone number recognized by directory assistance?

7. Are your incoming telephone calls professionally answered in your company name?

8. Have you established a business checking account?

9. Have you registered and asked for an Employer Identification Number (also known as an EIN) from IRS?

If your answer to the first question was a sole proprietorship, partnership or trust, we urge you to restore your business as a corporation or LLC. We will not give you legal advice, but many CPA and attorneys highly recommend

LLCs (Limited Liability Corporations) as a way to protect your personal assets and property ... in the event of any lawsuits are filed against your company.

As a sole proprietor, your personal assets are at direct risk of seizure or forfeiture when faced with most types of lawsuits. Also, if you're looking for business loans in a company name ... most institutions will not require you to provide any personal guarantee!

A company may still face difficulties applying for business credit, if it has been in business less than two (2) years or had previous credit problems reported against it. Here are some ways to solve these problems.

- Purchasing a "shelf corporation" or "old company" that has been working with your state government (for longer than 2 years) can drastically improve your chances for small business loan approval.

- You can try to repair your business credit rating by writing dispute letters to Experian or Dun & Bradstreet, which is not always possible.

- Some corporate credit experts will help you find, select and buy an established "shelf" or "old" company, some of which already have strong credit ratings established ... save you a lot of trouble!

We can not stress enough ... You must have a physical address (not a PO Box) if you want to establish a solid business credit rating. The same is said for telephone numbers and the way incoming phone calls handled. Would you like to borrow

money to a company that does not seem to have a physical address or phone number documented?

And do not forget to always keep your commercial permits, licenses and registrations current ... and always keep copies of these documents in case of a potential lender asks for this information.

Business checking accounts are a must. Again, this shows stability to your potential lenders. Here are a few tips for you if you have any control accounts closed with a financial institution. Repay the outstanding balance (if any) is that reported by the bank, or open a checking account at a bank or credit union that does not use the ChexSystems credit reporting system. Most credit unions do not use ChexSystems, and you can always find a list of banks in your area, do not use ChexSystems ... by simply doing a search on Google, Yahoo or MSN.

Small business credit ratings are tracked using your business name, business address and employer identification number (EIN). You can apply for and obtain an EIN at the IRS website (irs.gov). You can also call the IRS, but be prepared for long waits.

So you want to get a DUNS number from Dun & Bradstreet, the largest business credit reporting agency. You can apply for this without charges at Dun & Bradstreet's website (dnb.com) and you will usually receive this number in thirty (30) days. Do not use this number until you've prepared yourself thoroughly because all the information you give to them ... go into your credit file ... permanently.

Once you've obtained your DUNS number, you're probably ready to start on some vendor credit. Sells Credit is how many business owners start establishing business relations credit ratings. Simply go to staples.com, officemax.com or officedepot.com to get started. Then you also need to fax your business telephone bill & the credit application to them ... on your company letterhead (which you can make with your favorite word processing program if you do not have expensive stationery). They usually do not require any personal guarantees (if you've followed the outline above) and you will normally receive an initial overdraft of $ 750.

This is critical, and we repeat ... Critical! Always pay your invoices before the grace periods begin ... especially on unsecured credit cards or vendor credit lines. Dun & Bradstreet will lower your credit score for each day a creditor reports your bill as unpaid while you are in your grace period. Whereas personal credit score is not lowered unless you are 30 + days past your due date.

Dun & Bradstreet reports what is known as a Paydex score (your corporate credit score), and a score of 80 is very good ... with 100 being the highest score you can achieve. Your Paydex score is issued once you've established a known vendor / credit relationship with at least five (5) creditors.

There are shortcuts that will help you get more than $ 750 very quickly. When you use a business credit expert, most small business owners (self start) can be approved for vendor credit lines of $ 25,000 - $ 50,000 and open credit lines of $ 50,000, $ 250,000, $ 500,000 or more ... in as little as 45-60 days ... using their knowledge about the application process & "shelf" corporations.

Now, it's your choice. Would you go against the grain and try to establish business credit on your own (which can be costly to your business health, growth and survival)? Or will you choose to use a corporate credit expert ... allows you to remain focused on your daily needs?

Most business owners make the mistake of trying to do this on their own ... usually try to find grants, investor "Angel" money, or fall back on "personal credit card information swords." Do not be an accident, like the rest. Read more about how you can use the same tools that informed, educated millionaires have used for decades.