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How to Get a Very Low Fico Credit Score Business Loan

Get a very low credit score business loan.

Business loans with very low credit scores below 500 and as low as 383 are considered.  This low fico program is a good match for bureau’s below 500.

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Many programs do not offer small business loans with the owner’s credit score below 500, or have limited offers.    Get up to $150,000 in funding with fico’s under 500 and down to as low as 383.   Approvals is based mostly on company revenue and time in business.

Contact us below or first read the “Howto” section steps, direction and tips to getting low fico credit score commercial loan.  Almost all callers discover they can qualify for some program.

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How to get a very low fico credit score business loan

Step 1: Research companies that have low fico credit score business loans as main programs.   Review minimum funding amounts, rates, features and benefits and processing time from application to completion.

Step 2: Tip:  Prepare explanations or documentation for any unfavorable or incomplete information in your company’s profile.   This can be slow revenue periods or not much reporting in the bureau.

Step 3: Choose the program that most fits your repayment history and overall customer profile.

Pick the program that you think is going to be the best match for your business.

Step 4: Make contact with funding programs and confirm your business meets minimum funding program requirements.   Discuss amounts with the lender representative.

Contact the lender and talk about whether your business meets the requirements.

Step 5: Submit an application for funding.  Provide documentation you have that improves your chance for an approval, higher offer amounts and better terms.   This can include financial statements, additional bank statements or tax returns.

Get a higher offer by submitting documentation that shows your business to be stronger.

Frequently asked Questions FAQ:

Can I get business funding with a really low score?

Yes, your business still has an excellent chance of qualifying with strong cash flow and revenue. Providing the most recent bank statements showing you can make the payment will prequalify you.

Will we get less with bad credit?

Strong sales will still get the same or similar approval amount.

Can I get an offer with charge offs and delinquencies on my credit?

Your company can still get funding with the owner having charge offs or delinquencies. Programs include funding based on the monthly deposits or assets. Assets can be real estate or equipment.

Will my business need collateral with very bad credit?

Collateral is not required for approval with bad repayment history. Many customers qualify for unsecured programs.

Can a good credit co-owner get approved instead of me?

Another owner with higher scores can apply if they have 50% ownership. Strong co-owners with less than 50% ownership should apply under owner 1 and the other owner listed as 2nd owner.

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Too Many Credit Inquiries Pulled? What To Do Next

Has your credit pulled too many times recently?   Has your business also been declined for excessive inquiries? Business owners often get turned down for having too many in the last 30 to 60 days. Even if they are approved, they get lower approval amounts and shorter terms.

These programs specialize for people that have had their credit pulled too many times recently.

For programs that work best with a lot of inquiries, as well as offering the highest amounts with longest terms. apply below:

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1. Other helpful actions
2. Recent credit inquiries
3. inquiries from mortgage companies and car loans
4. Talk to a representative
5. Ask for the criteria
6. Hard or soft pull

Too many credit inquiries pulled

If you need a program that will not deny you for having your credit bureau pulled a lot, apply above.

Frequently asked questions FAQ: too many credit inquiries pulled

Can I get a business loan with a lot of inquires on my file?
Approval offers can be made with many recent credit inquires on a person’s credit file.  Many times they are not relevant to the risk. This includes those for cars, housing, utilities, or an applicant not knowing multiple pulls were made for one request.

Why are a lot of inquires a problem?

Lenders do not know if you were approved and a new account was opened that isn’t showing up yet as a trade line in your file. Approvals from recent inquires take a few weeks to show up on your credit file.

Can I just submit a copy of my credit report to get a decision?

A copy can be provided to assist in the decision. A separate bureau is pulled to make any final offers or approvals. Bureaus are pulled separately so the most currently dated file can be reviewed.

Do lenders have to check my personal credit to get a business loan?

Business loans without the personal credit of the owner being pulled are very limited. These are known as corporation only requests. Smaller companies with less than 35 employees rarely get approved for these.

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General credit inquiry Questions and Issues

“I had my credit pulled too many times and can’t get approved”
A broker sent my file out a bunch of lenders and now I can’t get approved for a business loan.  What can I do?
They told me my file has been shopped and I have too many inquiries.   What kind of financing can I get now?
“They pulled my credit too many times”

In general, your credit and credit score recovers from inquiries faster than any other type of derogatory or adverse action.    One pull may drop your score just a few points for a relatively short amount of time.

General Inquiry Information

Do inquiries hurt my credit?

A credit inquiry is often part of the process of applying for credit and should not be considered a negative by the applicant.  Lenders also know that applicants will have some checks on their file.
How many inquiries are too many?

There is not one answer to how many bureau pulls are too many.   This varies on a case by case basis.    Older credit files can have more inquiries before they are impacted.  Another  difference is that some inquiries are necessary and some credit inquires you cannot avoid.

Options if too many credit inquiries were pulled.

Other helpful actions

Actions you can take if your credit has been pulled too many times

recent credit inquiries

Count the number of inquiries in the last 30 days. Remember which companies checked your file.   As mentioned, some checks on your file should not affect your request for financing at all.  Make lenders will manually review your bureau and may overturn any denial.

Inquiries from Mortgage Companies and Car loans

The ones from mortgage companies or to finance a car should not count against you.   Tell the lender if you have these.

Talk to a representative

When applying for financing, try to talk to a representative that knows the lender’s criteria and can talk to you about it.   Will they decline for too many inquiries within a certain amount of time?

Ask for the criteria

Ask lenders to tell you as much about their approval criteria as they are willing to tell  you.  You may be able to find out that you will very likely be declined for a business or personal loan.   You can decide not to apply and avoid the inquiry before it is even pulled.

Hard or soft pull
Find out if the pull was a hard or soft pullFind out if the pull was a hard or soft pull

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Bad Credit – Fix it or wait it out?

You have bad credit. But what do you fix, how much credit should you fix, and how fast should you fix it?  But the question remains as to bad credit – fix it or wait it out?  Derogatory or bad credit is probably the top decline reason for all loans.  Sometimes credit should be fixed, and sometimes it should not. The premise of always fixing bad credit needs to be reviewed.

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Faq Frequently asked questions on fixing bad credit

Should I fix my bad credit or just wait for it to drop off my credit bureau?

Try to fix your bad credit monthly instead of waiting for it to drop off your credit file. Some derogatory items may show an updated reporting and that delays the time they take to drop off. Cleaning up the credit monthly will give you the highest consistent score.

What is the best way to fix my credit?

Get a copy of your credit report and see if there are any errors. This includes the status of your account, the number of late reported payments and the amount shown as owed. If you believe any of the items are wrong then you can dispute them with the credit bureau. Creditors must respond to disputes within a certain number of days or the derogatory item may have to be removed by the credit bureau.

How high can my score get by cleaning my credit?

It will depend on how many reporting mistakes are on your file. In many cases the score can be increased 50 to 100 points within a few months. Continuing to work on your credit will keep your score as high as possible.

Joint Accounts

You have joint accounts with someone and they are not paying them. Have a conversation with them.  Trying to fix that bad credit right away is premature.    If a Partner or Spouse was responsible for paying an account and does not, it will damage your credit if it is a Joint account.   There may have been a household verbal agreement that the Partner or Spouse was responsible. That does not matter on the credit report.   Late payments will show up for both of you.

Other questions first need to be addressed. Will you stay with your Spouse or Partner and are they communicating and working with you on the non-payment?
If you are not working together, then there is not much point to try fixing the credit right away.  Closing the Account may be the first step. If they are working with you then make a plan on whether or not it will be paid, by whom and when. Decide if you want to keep the Account open. Then later, derogatory reports can be disputed.   These issues need to be handled differently if the derogatory credit issues are with a business partner.
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Bad Credit – Fix it or wait it out?

The bad credit is already old

Bad credit, late payments, charge-off’s, foreclosures, and other derogatory items on your credit that are already 5 years old or older are not worth the cost and effort to try to remove them.  This includes 30, 60 and 90 day late reports.   After 7 years, many items drop off automatically. For those items, it does not make sense to manually try to remove them.

Bad Credit – Should you even try to fix it?

 

Federal and State Tax liens

These are much harder to remove.  It is also much easier to pay them and get a statement of “released” placed on the bureau just below the item rather than trying to get Tax Liens removed. If you have a payment arrangement, keep a copy of the payment arrangement and provide it to anyone that will look at your credit report.  Tax Liens on which there is a payment arrangement are looked at far more leniently than Tax Liens that do not have a payment arrangement in place.

Looking at some of these issues can help you decide on bad credit – fix it or wait it out?

 

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Business Partner with Bad Credit? Do these things

How to: A business partner with bad credit

Today you can pick from several loan options when you have a  business partner with damaged credit.   That’s good news.   That partner can even be you!

An associate with a low credit score will cause challenges .   Our programs are designed exactly for those situations.    Apply below and get funding today.

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FAQ Frequently asked questions on getting a business loan with a partner with bad credit

Question: Can we get a loan if my business partner has bad credit?

Answer: Search for lenders that offer programs specifically for business partners with bad personal credit and low bureau scores. Ask about approval requirements in advance, including a minimum credit score.

Question: What can we do after being denied a business loan for my partner’s low credit scores?

Answer: One option is to lower their ownership percentage at the secretary of state to below 20%. Some lenders won’t require them on the application or decline for derogatory trade lines if their shareholder percentage is very low. Another option is to remove them entirely as owner of the business.

Question: Should we try to fix my business partner’s credit instead of taking them off the business altogether?

Answer: Work on improving the bureau first if there is enough time. They can be lowered to 5% ownership or less and avoid being reviewed by many lenders.


How a bad credit partner negatively affects a business

Getting approved with a low credit score partner.

Options are more limited when applying for financing with a partner that has derogatory personal credit.  Lenders may decline when the ownership split goes over 20%

Some funders will not pull a bureau if the shareholder percentage is less that 20%. If the percentage is less than 5% or 10%, more lenders will not look at the information of those owners. If the business partner with a derogatory file has close to 50% interest, then chances are much higher the request will be declined. This is especially true with more traditional lenders like banks and the SBA.

Once the company has taken care of the financing needed,  the owners can consider longer term programs for derogatory history.   Should an owner with bad credit fix it or wait it out?

Getting a business location

Renting a location

Once a commercial location is found, the company owner’s credit is looked at. Landlords will pull a bureau.
Damaged credit may cause a rental request denial. Discuss this with the landlord. If the other owner has a very good file, the landlord may approve the rental request and lease the property.

Buying a location

If your company wants to finance the purchase of a location through a commercial mortgage, the lenders will also look at all the owner’s credit. The level of scrutiny will be higher than with a rental request, including full financial information.

Establishing business trade accounts

Many companies establish trade accounts.   Companies check the business and personal credit of the main owners when a trade account is applied for.   Significant negatives in the file may be a reason for denial.   Not being able to secure important trade accounts can be very damaging and cause the business to be short of the inventory, equipment and other critical needs.
Even if the business can secure the trade accounts it needs, the terms may be more expensive because of the partner with bad history. This will translate to increased costs to operate.

Obtaining Government and Private contracts

When a business bids on private or government contracts, the personal credit of the owners is reviewed. If there is a business owner with a severely damaged bureau, it will be more difficult to secure these contracts. The contract request may even be denied for this reason.

Background checks

There are many reasons why a background check for a business loan may be completed on the owners.  Some of the reasons have already been listed. If a background check is requested, it will include a bureau.  Bad trade account history on any of the owners may be a reason for denial in a background check.

Solutions

A number of negative consequences of having a business owner with bad credit can be fixed.  The problem can be reduced or improved upon.

Change in ownership percentage

The biggest change that can be made is lowering the ratio of ownership of the partner with bad credit.  They may not agree to this.    Lowering it to less than 20% should prevent declines and less than 10% would be even safer.   A split of less than 5% would eliminate the problem in most cases.

Lowering their stakeholder proportion will not be popular with many of these owners. A remedy to this is to consider other changes in the bylaws of the corporation. There are many options including issuing company stock.   A higher salary and a commission structure can be added or increased. Another compensation is to pay more towards their IRA. All of these actions are ways to balance reducing the ownership ratio of an existing partner with low credit scores.

Change articles of incorporation

If the partner with hurt credit agrees to lowering their stakeholder amount, the Articles of Incorporation should be changed to reflect this.  Many States show ownership breakdown in the Articles of Incorporation.  After the Articles of Incorporation are updated to reflect the new percentages, they should be submitted to the Secretary of State.

Updating the Secretary of State

Update the Secretary of State listing which lists information on the company.  Remove the owner with bad credit, or lower their percentage.  List the owner with better file as the main owner.

Update business credit reports

Review and update company reports. This includes Dun & Bradstreet and Experian commercial report. There is a section listing the owner’s name. This should be the owner with the stronger bureau.

If further assistance is needed, the SBA has excellent resources.

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Asset Based Loan

Credit Inquiries You Cannot Avoid

“Credit Inquiries” has been a topic of much conversation and concern in recent years.  The following is current information you should know about credit inquiries you may not want to avoid.

There are however,  credit inquires you should not avoid because they often are the best programs available in the market.  Soft pull credit options are available as well.   Apply Below: 

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Some of the best business loan programs are hard pulls

Avoid all credit inquiries can keep you from getting what you want..

Many people are reluctant to have  credit inquiries to be pulled on them even if they are applying for a loan.  They tell lenders that they want to be considered for the financing without their bureau being pulled.

This is not feasible or realistic, especially if the request is in the name of an individual.  In most of these cases, these requests are in the name of a small business and the owner wants the request to be in the company name, not in their personal name.

If a business has less than 35 employees, in most cases the lender requires the owner’s credit to be reviewed.   There are options you can take if you have had too many credit inquiries pulled.

But I pulled my own credit report!

Virtually no lenders will decide your loan request with a consumer obtained bureau.

Consumers can contact credit reporting agencies as well as outside vendors that provide bureaus and get all 3 bureau reports.   These files are not the same that lenders obtain.  Consumer reports are formatted differently and are simpler than the lender’s re.  The consumer version often provides more written explanation and sometimes less numerical detail.

Consumers will sometimes review their bureau and tell the lenders to use the consumer obtained reports they have rather than the version pulled by the funding source.   The report the consumer has will almost always be older.   The lender wants to see if anything has happened since the date of the report the consumer has in hand.

There are many outside vendors that provide intermediate party credit files.  Lenders are not, and should not be expected to know whether those vendors provide updated and satisfactory information.  Lenders are not obligated to use those.  As a result, consumers should not expect to avoid inquires by demanding that lenders use their consumer version.

 

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Asset Based Loan

Another credit downgrade coming with debt ceiling fights?

Will an exploding national debt in 2021 trigger a US government credit downgrade?

Covid-19 and government stimulus programs have instantly added trillions of dollars to the U.S. national debt in just the last year. No one really knows how much longer can this go on before there is a credit downgrade or market driven interest rate increases.

In recent years, the treasury department took extraordinary measures by moving money around to meet the government’s commitments.  Congress finalized lists of requirements they demanded that the administration meet in order to ensure cooperation.   However, bond rating agencies didn’t care much.

They stated that another round of fights may trigger a further credit downgrade of U.S. Treasuries.   Is another credit downgrade coming with the upcoming debt ceiling fight?

Counter arguments have been made by some U.S. politicians that not increasing the debt limit will not be a crisis. How? They say Congress could authorize payment of principal and interest on existing U.S. debt, while not paying obligations in other areas.  

However, bond rating agencies such as Fitch has indicated that such a ploy will basically be considered a thinly veiled default and may still trigger a review of the Government’s credit rating.   Their view is that such a move is nothing more than debt prioritization. It pays certain obligations but not others, and is just another term for default.

Politicians have already shown that they are willing to use the debt ceiling as a political weapon at the expense of the nation’s credit.

Compromising to save the nation’s credit rating does not seem to be a concern. The nation’s credit deserves far better than this from both parties.  It appears that the more extreme wings drive the debate to a head.

Another major danger in this type of fighting is that the debt limit has to be increased roughly every year. This is because it is only increased a relatively small percentage after each fight is settled.

If the branches of Government authorize ongoing increases by an already agreed to plan, these credit downgrade threats would largely go away.

The national debt problem will have to be addressed at some point. Until then, missing payments and threatening default make the problems worse.

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Asset Based Loan

Business Lines of Credit: How to Get The Most Difficult Business Loan

In most cases, a business line of credit is the most difficult type of financing to get.   Business owners should look at the terms.  This  includes interest rates, number of months, total amount of the repay, and early payoff considerations.   

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FAQ Frequently asked questions on how to get a business line of credit

How can I get a business line of credit?

Time in business of two to three years is often required. Other requirements include a 680 or higher credit bureau score, full financials and industry requirements. Full financials means 3 years business and personal tax returns, a personal financial statement and interim financials. Interim financials are a year to date profit and loss statement and balance sheet.

Why are business lines of credit so difficult to get?

A business line of credit is hard to get because it is set up to be available indefinitely to the borrower and does not have a limited term. Lenders consider this long term exposure to be high risk and require a longer history of business success with increasing gross and net income. If the business shows low net income and flat revenues, they are unlikely to be approved for a business line of credit.

Can my lender require me to suddenly payoff my business line of credit?

An annual payout provision and the lender being able to call the loan and require payoff at anytime is legal and enforceable when it is written into the contract. These provisions are extremely risky for borrowers. Lenders sometimes call loans because they decide to lower their risk models, or when they are being acquired by another lender. They may call loans even if the borrower has a clean payment history. Borrowers do not know in advance their loan is going to be called and often cannot pay it off immediately. Their business could fail because lenders may be able to seize their accounts receivables, real estate or any other collateral attached to the line of credit.

Some lenders put conditions on a line of credit that negates all of the other advantages of the financing.  Lenders may require the borrower to put up their home as collateral.  Borrowers should realize this becomes a home equity line of credit.  Borrowers are then giving their home and business assets as collateral. Why not not consider a home equity line of credit then?

Borrowers may be better off looking for other financing first. Attempt to negotiate the terms of the approval with the lender when your business is using real estate as collateral.

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Asset Based Loan

Advantage of leases on personal credit

Leases have long been a popular financial instrument.   Leases are often reported differently than regular loans.   Depending upon the lessee, the reporting differences may be an advantage or a disadvantage.

In many cases, leases are not reported on personal credit, especially business leases.  In a business lease, the lease is not reported on the signer’s personal credit.   For more established businesses and individuals with a longer, more established credit history, the fact that the lease is not reported is considered an advantage because it will not be counted as an additional debit to the individual.   Conversely, if the lease were reported, it would be considered a disadvantage.

 

In the case of newer businesses, younger individuals or individuals with limited credit, the fact that the lease is not reported on individual credit could be considered a disadvantage.  In these situations, the lessee may want to build up positive business credit and personal credit and a new significant reporting would be an advantage.    For any business that is less than 3 to 5 years old, a lease reporting will help the business credit since the business is building up credit.

Many of the business credit agencies will report the lease or show the lease under one of their industry trade account listings.    D & B, Experian Business credit report and Paynet will typically report the trade reference.    The lessee can take the lease number, lender name and lease approved amount, contact the business credit reporting agencies and check if they are being reported.   If not, the lessee can provide the information to the business reporting agency and get it listed.   Some of the business credit agencies may not have an account or file for the lessee’s business.  In that case, the lessee needs to decide if they want to establish a file.   The business credit reporting agencies may charge a significant fee to get a business credit profile established.

 

If that occurs, the lessee needs to have as many business trade accounts ready as possible. The lessee should have a list ready with existing trade reference company name and account numbers.

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Asset Based Loan

Can a strong Co-signer make up for a bad credit primary signer?

There is a long history in credit of using a strong Co-signer to strengthen an application. However, can they make up for a bad credit primary applicant?

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What is a Co-Signer?

It is anyone that signs with you on a loan request.  It is normally done when someone with stronger and better credit than you offers to sign to help you secure financing.    A co-signer is jointly liable for what they are signing for.

In general, a strong Co-signer does not make up for a bad credit primary applicant.   If the primary applicant has a lot of derogatory information, a strong co-applicant often can’t help turn a decline into an approval.   Great credit does help in situations when the primary applicant is not strong enough, has limited credit or minor negatives on their bureau.

There are several reasons why a strong Co-signer is often not helpful when the primary signer has significant derogatory credit.

Lenders know that in most cases, Co-signers sign only to help the primary applicant get the loan.   They really don’t want to pay past due or default payments.

Examples are parents that sign for their children to help them get a car loan.   However, there are many other examples.    Sometimes another relative or friend may help them get the loan.    In these cases, the secondary signer does not get the proceeds or asset being applied for.

Due to this, if the primary applicant runs into difficulty and cannot repay, the guarantor usually does not want to pay because they received no benefit from it.    In the past, guarantors have told lenders that they just signed the paperwork to help the other person get the loan.

In some cases, the C0-signer really believes they will not be held responsible.    They believe their responsibility stopped after they signed the paperwork.

Lenders know primary applicants with bad credit will go past due often.  As a result, the excellent credit guarantor will be asked to make good on the debt.

Strong Co-signers cannot always help a derogatory credit primary applicant get approved for a loan.

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Asset Based Loan

How a Government Credit downgrade affects services

There is currently little awareness, or interest,  if and how a Government credit downgrade affects all services that the Government can provide.

In both the short and long term, a Government credit downgrade has a significant affect on the services Government can offer to society, mainly in a reduction of those services.    One need only look at Greece to see the nightmarish affects of many downgrades in credit, to the point where Government issued bonds going into junk status.

When the Government suffers a down grade in it’s credit rating,  it may be foreced to offer a higher rate of interest on the securities it issues to attract capital investors.   Currently, the Government pays approximately 12% of the revenues it takes in to investors through the Government Treasury bonds it has issued.    This means that the Government is now using approximately $300 billion per year to pay interest owed.   The public receives no benefit from this money.   It is, in essence, completely wasted money.  If there is another credit downgrade, or several downgrades, it may force the Government to pay a higher rate of interest on the same Treasury bonds to attract the same investors.

If an extra 1% in interest is paid, this is very significant because it is likely to be a permanent increase rather than a temporary or fluctuating  increase.    In order for the interest payment on bonds to go down, the credit rating issued by Moody’s and Standard and Poor’s would have to be upgraded.    Considering the Government’s large and consistent budget deficits, this scenario is unlikely, especially in the short term.    The extra 1% paid in  interest will represent approximately $10 billion dollars per year, each year, ongoing for those Treasuries issue in that 1 year.   If this is done each year, with a budget deficit of $1 trillion, this is approximately and extra $10 billion every year, on top of the previous year’s trillion.

So how does this affect or decrease services?

This is money that the Government cannot now use, that is previously did use, to fund any services or benefits, including Medicare, Social Security, Education, Military, Highway, unemployment, job training, or any other areas of the budget.   Every year that the Government says it has to reduce the benefits to Medicare and Social Security because of limited funds, those funds that are now being paid in interest could have been used to fund these programs, rather than cut them.    A future post will focus specifically on the dollar amounts per year.