Are you a business owner with good credit but the bank turned your loan down?
Ever since the credit crisis of 2008, the lending guidelines have drastically tightened up across all financing verticals. When I worked in the mortgage industry, I recall seeing credit reports with credit card balances and/or credit lines from Bank of America in excess of 100k. These borrowers weren’t your top paid professionals; you’re talking about your medium income home buyer. Banks were approving credit cards without any hesitation. That was yesterday, now that things have gotten more difficult, you will see you need more than a credit score to get any type of financing.
Good credit doesn’t always guarantee you financing.
Having good credit is just a fraction of what will be required if you’re trying to get financing from your bank or credit union. For example, if you’re looking for financing that doesn’t require a personal guarantee from the principal’s of the company, your resume better be extra clean. In our industry we call this “Corporation Only” or “Corp Only”.
Here are some requirements for a “Corp Only” program that is offered by a well known financial institute:
- Must have 10 or more trade lines
- 5 or more years time in business
- 20 or more employees
- 70+ Paydex with comparable debt
- No lawsuits, liens, judgments or bankruptcies
So as you can see just having good credit wouldn’t get you anywhere with a “Corp Only” type of financing. In fact, that’s the purpose of Corp Only programs; they don’t necessarily look at your personal credit. The company needs to be able to stand on it’s own.
Here are some requirements for a business Line of Credit from a very well know international bank:
- 2 years time in business
- 250k minimum gross revenue
- No losses can be shown on business tax returns
- 2 years personal & business tax returns
- Minimum credit score of 650
This is a great example where even having an average credit score wont hurt your ability to get financing. But you also need to meet the other requirements. So if you’re a start up business or if your business has lower income or even if your business shows a small loss at the end of the year (which is not uncommon), you will still be denied a line of credit from this bank.
What if you can’t or don’t want to provide tax returns for your business?
Depending on what type of financing you’re trying to accomplish, you might be surprised to hear there are programs out there that don’t require tax returns and sometimes they don’t require high credit scores.
Here are some financing programs that might be unknown to some business owners:
- Business Loans: 500 minimum credit score, bank statements only, no tax return needed, min 60k annual gross revenue, 6 months time in business
- Equipment Leasing: No credit score required, 1 day in business ok, bank statements only, minimum financing amount 10k, maximum financing amount 250k
- Equipment Leasing: 550 minimum credit score, Start Ups under 2 years time in business, no tax returns needed, minimum financing amount 5k, maximum financing amount 30k
- Account Receivable Financing: No credit score required, No tax return required, line of credits up to $15 million, receivables must be from reputable companies
As you can see, having good credit isn’t necessarily the only requirement if you’re looking for a business loan or other type of financing for your business.
If you would like to explore our different programs, our business development managers are available and can be reached at 888-565-6692.