Background Check for business loans: How to apply and what to know

Background checks for business loans are when there is an investigation into the history of a person or company.    This may include criminal history, civil suits history, credit checks, employment history, educational history, tax history and other checks.

Examples of a background check and background history review.  

A business owner applies for a business loan and is approved.
One of the closing stipulations is to get and review the background history of the business owner.
A business owner cannot pass a background history review and is declined because of something in their background.   For that reason they should consider other types of business loans that may not require a background check.    If get a business loan with a criminal history, or if you cannot pass a background information review, contact us below at SmallBusinessLoansDepot.com for several options.
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Did you know?

Customers cannot always pass a criminal background check for a business loan.
What can you do if the owner cannot pass a check on their past history for a business loan?

Background Check
Get a business loan without a background check or if you cannot pass a background check

Faq, frequently asked questions on a background check and history review

What is a background check?
A background check is a search into state and federal records on an individual. The check searches for any criminal records including felony and misdemeanor records. It also checks personal credit, current and previous residences, work history and employers, marital history, divorce records and may include driving records.
I was denied for a business loan for failing a background check. What can I do?
Contact the lender and ask them what their criteria for background checks is. They may
tell you. Try to find out if what is on your background is a clear and hard decline reason
or if it was a close call. If you can determine if it was a close call then provide an
explanation for your background and ask for a re-review along with your explanation.
As an example, if you have an assault and battery charge on your record but it was
reduced to disorderly conduct, then tell the lender this. You may have been declined
for the charge rather than the much lesser conviction. If you were denied for a much
lesser conviction then you were denied for the original charge which is only an
accusation.
How can I get approved for a business loan with a criminal record and bad background?
Do research to find lenders that will still consider businesses with owners that have
something on their background history. Have the details of your background ready
and contact those lenders. Get as much detail as you can when you are talking with them.
Match up to the business lender that is most likely to consider your request and apply.
Will I get declined for a business loan with a drug history on my record?
This depends on the lender. In many cases a drug history will not be a major obstacle
to getting a business loan. However the severity of the offense may be important.
Offenses involving drugs and minors or sale and distribution may be an issue with lenders.
You can ask in advance if the lender has a policy on these issues.
Can I get a business loan to start a business with a criminal felony on my background
record?
This may depend on the severity of the background history and conviction
as well as if there are multiple counts. Some states restrict people with a felony or
other criminal history on their background from being able to get licensed for certain occupations. Guidelines are different with each lender and what they allow. Check with the lender.
Will a misdemeanor get me declined for a business loan?
A misdemeanor should not cause you to be declined for a business loan or have any trouble getting a business license.

There are other options for you.  above all, contact us to discuss other options.   Explain what will show up on your record and we will offer other options that can work.

Background history reviews are done for many reasons.   Most often they are completed when someone is requesting a product or service and also entering into a Contract or Relationship with someone else.   They are not always looked at the same way.   What is looked for is totally up to the party that is pulling the report and also what they decide about the information.

What do you do if you want a business loan with no background check?   If this has caused you a problem, call us above.
You will find funding options for borrowers with background issues. Even more, you will get personalized discreet service with a representative that understands these issues.

Learn more about background reports.

Recent examples from the Web:

Business News articles 

Business loans with no tax returns: How to get them

Need to get a business loan with no tax returns?

Several programs are available to get approved for a fast and easy business loan with no tax returns.
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FAQ Frequently asked questions on getting a business loan with no tax returns

How can I get a business loan with no tax returns?
Choose and get approved from one of several programs that best matches your business. Fast and easy

Example of what to do if your business is asked for returns.

A business applies for a loan and is approved.   However, the Lender requires the most recent tax return or 2 years tax returns.   If you are a new business, or have filed an extension, your business cannot provide this information.

FAQ Frequently asked questions on getting a business loan with no tax returns

How can I get business loans with no tax returns?
Research for companies that offer business loans with no tax returns required. Choose the program that best matches your business for the amount requested, credit, time in business,
annual sales, revenue and what the loan is for
Will we have to provide other proof of income like financial statements, bank statements or pay stubs?
You will probably not have to provide other proof of income. Not requiring tax returns is meant to be a program that does not make you prove business income through tax returns or financial information. You may be asked to provide business bank statements. This is because the lender has to figure out how much your business can afford.
Are there stated income programs where I can just say what my business sales are?
There are some programs where you may be able to just state your business income. These programs are based more on credit than sales. Businesses with strong sales are better off giving tax returns even if they don’t have to because approval amounts may be much higher.

If your business cannot provide Tax Returns, then:
Before applying, ask if Business Tax Returns will be required.  If so, apply for a business loans that does not require returns.

Business Loan with no Tax Returns
Want a business loan but do not have Tax returns?
Choose these options

Lenders will not scrutinize the returns even if they require them.   They will not review Gross and Net Profit, Business Tax Write Offs and other parts of the return.  However, if they ask for a return, you have to provide it.

Business owners are often afraid to provide a return because they show a net loss.  What can you do?  Apply for programs that do not require business returns.   Ask the lender in advance how closely the return will be scrutinized.  Many loan programs will just get the return to verify it has been filed.

The request for returns are also part of  “closing stipulations”.    Other items that are usually required for closing stipulations include a copy of current driver’s license, in addition to a clear copy of voided business check,  copy of business license.

Other frequently asked questions, requests and comments:

1.   “I need a business loan without tax returns.”
2.  Need a no tax return business loan.
3.  Cannot provide tax return for business loan.
4. I don’t have any tax returns for my business yet.
5.  Filed an extension on my tax returns.   What do I do?

Bookmark our resource page.

What is subordination of debt?

When a lender agrees to the subordination of debt of one of their existing customers to another lender.   This puts them secondary and behind in the lien position to the company they are agreeing to subordinate their customer to.

Example of subordinating debt:

A business applies for a loan but the lender cannot close the loan because a different lender already has a lien on the same assets of the borrower.

The subordination of debt issue has become even more of a hurdle when customers have one or more Merchant Cash Advances and tries to get a different type of loan.
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Accounts receivables lenders and many other lenders have issues closing their financing due to existing Merchant Cash Advances.   A Merchant Cash Advance provider may already have a blanket lien on all furniture, fixtures and receivables on the customer’s UCC listing.

This means that the new Lender as well as any other Lender cannot put a lien against the receivables.  They must ask that Lender to subordinate rights to the receivables to them.   For Funding that does not require you to subordinate debt, contact us below and get started.

What is subordination of debt?
Subordination of Debt

The lender that subordinates gives up their rights to that specific Collateral.   Why would a Lender be willing to give up rights to Collateral?
It is usually because the Lender took all of their customer’s Collateral for their Loan.  They did not need all of the Collateral and is really not interested in all the Collateral.
They took all of it because it was available and the customer did not object or say no.

A Lender that takes a lien on all of a Company’s assets would only try to liquidate certain Collateral if the customer defaulted.   As a result, they are often willing to give up rights to Collateral they never would have gone after anyway.

For more information on subordination of debt, visit resources such as the SBA.

Business optimism in April highest in 6 months

Business optimism is at a 6 month high.   According to statistics by the National Federation of independent business, optimism by businesses is the highest since late last year in several key categories. The organization’s optimism index increased to 92.1, up from 89.5 in March 2012, and the 2.6 point gain was the highest jump since October 2010.  The survey size was 1,873 firms.

According to the statistics, businesses are optimistic in multiple areas, including planning to hire new employees, with 6% of respondents planning on hiring new employees versus 0% in March 2013,  and 1% in January 2013.  23% planned on moving forward with increased capital spending versus 20% in December 2012.  4% expected higher sales versus none in the previous months.   Another important area of improvement is an increase in increased sales prices from 0% at the end of 2012 to 3% in April.   Businesses have confidence that consumers will be willing to pay rather than be driven off by higher sales prices.

These statistics are not reflective of a strong economy, rather continuation of a slowly rebounding economy.  The surge in the stock market over the last 2 years has been cited as a reason for optimism by many companies in other recent polls.

There has been virtually no shift in businesses’ view of an ease in credit conditions, which
continues to be viewed as difficult with tight access to credit markets.  Businesses continue to report having difficulty obtaining the financing needed for new hires, and other capital spending needs such as expansion.  These tight credit markets are causing many businesses to research alternative growth financing such as accounts receivables financing, contract financing, loans based on gross sales such as bank statement loans, loans  that businesses can obtain based on the sales of the business.  This funding can be accessed through networks and hedge funds specializing in alternative business loans.

The National Federation of Independent Businesses stated in summary that 4 of the index’s 10 main components measured contributed to most to the increase in the optimism percentages.   The SBA, Small Business Administration states that small businesses are considered to be less than 500 employees, which represents 99% of all companies.

Declined for a small business loan?


Has your business been declined for a business loan?  Where can you be approved?  Helpful tips to follow to turn a decline into an approval. Match your business to small business loans that you will get approved for.

What caused my business to be declined?
What are the most common decline reasons?    These questions and others are asked by customers and lenders.
If you have been turned down for any decline reason, contact us.  We specialize in difficult to approve businesses and business loans and have programs that can approve your business for any decline reason.

If your business has been turned down for a small business loan, the first step is to call up the company that turned you down.   Determine if you are speaking with someone that has the knowledge and experience to provide you with useful information about the decline.  If you received a letter, call and confirm the decline reasons.   In many cases, you may have been formally turned down for more than 1 reason, and as many as 4 decline reasons.
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FAQ Frequently asked declined for a small business loan questions

Why don’t banks lend to small business?
Banks do not lend to small businesses much because small business is considered a higher risk than larger businesses. There are several reasons for this. A small business usually has to have excellent personal and business credit as well as strong collateral and financial statements. In most cases the collateral has to be a certain type that can be liquidated easily and quickly. The collateral may have to have a value between 200% and 1000% of the amount of the loan. Financial statements must show steady or increasing gross income and enough net income to service the new debt payments. Personal financial statements may need to show the net worth capacity to repay the loan if the business cannot repay from regular profit and cash flow. Smaller businesses often have not been in business as long as larger businesses. The earnings of smaller businesses usually fluctuate more than small businesses. The credit of the owner of a small business more closely reflects the level of success of the business. Small businesses have smaller relationships or no relationships with the banks they try to borrow from. Larger businesses usually have large and long standing relationships with the banks they borrow from. Banks tend to have many decline reasons for declining a small business loan. Each of those decline reasons in turn represents a review threshold that has to be met in order to be approved. Some banks have up to 50 decline reasons from which they may decline for.
How can I get a successful business loan?
You can get a successful business loan by first understanding as many of the different types of business loans available in the marketplace as you can. Then have a good knowledge of what it takes to get approved for the various business loans and what are the most common reasons your business will be declined. Combine this with understanding the strengths and weaknesses of your business
Are sba loans easy to get?
SBA loans are not easy to get. They require a great deal of paperwork to be completed. The sba paperwork includes a lot of information you have to give to the sba and many questions you must answer. Having to provide vastly more information than other lenders require gives the sba more information that can end up being a decline reason. The sba loan process takes many weeks or months. You may spend many weeks working on an sba loan only to be turned down close to the end of the process. If you are considering an sba loan then it is suggested to spend more time upfront with an sba representative discussing the process and requirements in detail before applying.

Missed daily payments

You have an existing daily or weekly Merchant Cash Advance and you have missed payments on the advance.   Missing daily payments is a major reason why a new loan request may be denied.   Missed daily loan payments may can a renewal request to be denied.

Average Daily Balances too low

This decline reason means that your daily ending balances were too low over the month.   Lenders have different balances that they want
and often will not tell you.    Many lenders often want at least $1,000 Average Daily Balance.

Inconsistent Cash Flow

Business cash flow has fluctuated too much from month to month. In some months the cash flow meets the minimum required by the program and in other months it does not.

Declining Cash Flow

Total monthly deposits into the account have been declining from month to month. Even if the average still meets criteria, the lender may still feel this is a reason for the turndown.

Does not meet criteria

This is a general decline reason. If you are declined for a business loan for this reason, the lender does not want to tell you the decline reason.

Month to Date MTD

This a decline reason that often happens with Merchant Cash Advances.   The Month to Date activity is requested for the current month.   If the deposits are on track to be significantly lower in the current month, the approval be declined or the amount may be reduced.

Ask if significantly lowering the amount of the request,  adding a strong co-signer, or adding more collateral would cause them to reconsider and possibly approve the application.  Speak directly with the credit department that makes the credit decision.

declined for a business loan
Reasons why your business loan was declined

If any of the reasons you are declined for a business loan involve credit, you will want to contact at least one of the credit reporting agencies to determine what is on your credit file.   You may already know most of what is on your file, though you should get a copy of your file to confirm it.   If there are any inaccuracies, you should dispute them with the bureau.   This is easy to do and can improve your bureau without significant effort.  If the bureaus cannot prove the information is accurate, you may have success in getting it removed.

Once you accept what is on your credit report, begin looking for other alternative loan options.   First determine what are the strengths of your business and weaknesses of your business.   When you contact companies, find out as much as you can about what their alternative loan options are based on.   Instead of choosing the business loans you like best, organize the loan types in terms of what your business is most likely to qualify for.  Of those loan options,  then decide which ones you believe you should proceed on.

Other Loan Options

Discuss the loan options with the representative and speak with someone who is knowledgeable, rather than someone reading from a script.   If they don’t give you logical answers to your thoughts or concerns, try to speak with someone else.  Don’t feel that you must get all the funds you need through 1 type of loan, or all of it immediately at that time. There may be 2 loan types that you should proceed on.

If your business needs $100,000 in total,  and you only qualify for $50,000, this may still work by getting the funding in segments over time.   You can take the $50,000 you qualified for and also work on getting the rest of the funding required over the course of the next few weeks or months.  Chances are you did not need the entire $100,000 immediately.  Most businesses that receive $100,000 do not spend it all within the first 30 days.  If your business has been declined for a business loan, many of these steps will be important to getting approved.

For additional resources to help you prepare for future business loan requests, you can
also visit the SBA.    The SBA government site has numerous resources which can assist your business.

Thank you for visiting our resource page on what to do if you are declined for a business loan.

Google Circles – Why do it? November 11, 2016. 11/11/2016

Why participate in Google Circles?
Adding people to your Google Circles and other people adding you to their circles is something which should be done because it continues adding significant value to the articles and blog posts you are already writing, including posts on your website and in forums.

How does it add value to me? The more people that have added you to their circles, the more weight everything you write carries.  Think of it as being an author.  Each person that adds you to their circles says you are credible.  This increases the weight and value Google assigns to you as an author and what you publish.  The more weight Google applies to you as an author,  the higher your rankings will be for what you publish.  Google has stated that it will continue providing results from sources with the highest credibility.

How can I participate in Google Circles?
Establish a G-mail account.  If you have a G-Mail account, you have a Google plus option in the far left of the top menu bar you see while reviewing E-Mail.  Google plus is a forum where you can post any thoughts, articles of interest you have seen, and more.   A main option is to add people to your Google circles or for other people to add you to their circles.  Add people organically.  As you come across them through your regular work, you can add them and they can choose to add you.  If you comment on their work or their google plus posts, they may add you.  If you have a rapport established with someone already, you can ask them to add you to their circles and you can reciprocate.  You can also contact friends and add each other to your circles.

As you obtain more credibility, you will notice that many of the articles and blogs you write will rank significantly higher.  They will be read and approved of by some in your circles.  The ranking of your publications is also boosted by those whose circles you are in that click
on, read and recommend your articles and blogs.

Why Businesses get hurt if debt ceiling isn’t raised

Many business owners are conservative.   They obey the laws, watch their spending, and are cautious.   Many will say that the Government should not increase the debt ceiling knowing that the Government will be taking on more new debt.    It is a good idea for the Government not to take on new debt, but not this way.

Currently, the Government spends over 40% more than it takes into it’s coffers in revenues.   Economists have argued in past years,  by what percentage the Government can cut it’s spending in one year without hurting the economy, and many Economists felt that a cut of just 4% per year would slow down the economy short term, even if long term it benefits the country.

If the debt ceiling is not raised, or raised within one or two days after the deadline, the stock market will take a major dive.  Individuals will pull back on spending until they are comfortable with what will happen.  Large Corporations will follow suit and put on hold and delay any hiring or expansion plans.    Interest will continue to be paid or the country would suffer a true technical default.   World markets will truly be aghast and dive mostly due to the reckless self destruction.   Moody’s and Standard and Poors may impose another credit downgrade, further aggravating markets.

The Government will truly be forced to choose who receives Government money and who does not.   Watch in amusement as some of the same Congressmen and Senators who voted to not raise the debt ceiling suddenly demand that the flow of money continue for their districts.   Unemployment benefits, assistance for farming, highway money, and Government contractors will undoubtedly be among the first victims of a massive spending cut.   Companies that provide products for the military will also take massive cuts because Congress will make every effort to pay the soldiers.   If the department of education takes cuts this will cut funding to colleges and schools.   Other departments such as the Commerce department, the department of labor, and the State Department would all very likely take cuts.

While many people feel this would be good in principle, the state department includes funds for Embassies and Consulates, including the defense of those organizations.  The commerce department includes food safety and inspection.   Funding for Ports and border security have to be considered.    If the Department of Homeland security is cut, then many functions now happening would slow down.   Many of these employees would be temporarily cut.

The media effect would be tremendous.   Media outlets will interview unemployed and furloughed employees who will vent vicious frustrations.    Public opinion polls will reflect the worst ratings for Congress ever in it’s history.    Such a situation will be guaranteed not to be long term.    Congress will then quickly raise the debt ceiling.   Renewed talks of whether tax increases are justified in order to pay for desired services will begin.    People will realize the value of services lost, previously taken for granted.    Once it is accepted that the national debt must be address long term, their new found dependence of services will be weighed versus revenue increases and future proposed spending cuts.

Why the Debt ceiling is the most dangerous battle

Of the 3 major battles that are in process, the Fiscal cliff, the delayed spending cuts and the debt ceiling, the debt ceiling holds the most danger to the economy and the country.   The reasons have to do mostly with the dollar amounts are larger, those larger cuts are more sudden and the bond rating agencies have targeted a debt ceiling fight as a bellwether of whether they will downgrade the countries credit rating again.

Let’s compare all three.   In the most recent fiscal cliff battle, revenue rates were increased for those earning over $400,000 per year form 36% to 39%.    Those with incomes over $400,000 represent approximately 1% of the population.    Spending cuts were supposed to take place in the range of $1.6 trillion over 10 years through and where those cuts are supposed to occur is still a matter of debate.   Republican House Speaker John Boehner
(R) – Ohio, Senate Majority leader Mitch McConnell, (R) – Kentucky, and many in the rank and file membership of the House and Senate want to have major cuts in entitlement programs such as Medicare and other Government programs, possibly including the department of Education, the EPA, Environmental Protection Agency, and many others.
The most significant fact is that the cuts are supposed to be approximately $1.6 trillion over 10 years, which represents $160 billion per year, which represents only approximately 5% of the Government’s budget per year.

– The debt ceiling is much more dangerous for 2 reasons.    If it is not raised, it represents
a much larger cut, 40% to 45% immediately versus the 5% or somewhat larger cut being
negotiated in spending within the next 60 days.

Example of the numbers:

The government’s current budget is approximately $3.4 trillion dollars per years.   At the same time, government takes in approximately $2.2 trillion dollars per year in revenues, creating an approximate $1.2 trillion dollar budget deficit.   It has to borrow the difference. If the debt ceiling is not raised, it cannot borrow any money.    This means the government will have operate on $2.2 trillion per year instead of $3.4 trillion.    A shock of 40% plus in spending cuts will trigger massive austerity reductions in programs.    If these occur, expect the shock to immediately reverberate through the general public within days or less.

Will Social Security checks be guaranteed post fiscal cliff?

In last years June 2011 fiscal cliff fight, President Obama went on the nightly news to state that if there was no agreement on the Fiscal Cliff, then it could not be guaranteed that Social Security checks would go out.    In this years fight, the president has not stated the same message with regard to Social Security.    This creates the question,  if there is no agreement on the fiscal cliff, does the same danger apply that Social Security checks may not be issued, or may not be issued on time?

In this round, the president and other lawmakers have talked less specifically about a variety of programs that will be cut or not receive funding and how it may affect certain sectors of the population.   It seems that the politicians do not want to frighten only one group, and in this case it would be the most vulnerable group within the population, Seniors and the elderly.    The truth is that certain programs will be cut and they may include Medicare and Social Security.   It may not have been specifically talked about on this occasion but it is a real possibility.

The debt ceiling will be raised, that is certain.   The only real question is if it will be raised before damage is done to the economy.    There are several ways through which the economy may be damaged if the debt ceiling is not raised by the deadline.

– The stock market will react very negatively in fear that spending may be cut over 40%
instantly.   Markets will also react negatively due to the fact that the bond rating agencies
Moody’s has stated that they would very likely lower the ratings of U.S. Treasuries if
there is not an agreement, preferably longer term agreement on the Fiscal cliff.

– If the debt ceiling is actually broached beyond the hard deadline and not solved, there
would be spending cuts in the order of 40% + instantly.  This would be a major shock
to the economy.   A sudden Government decrease in spending of over $1 trillion would
definitely be a shock to the system.  Politicians would be unwise to play politics with this issue.