Restricted industry business loans: Video with Tips and Steps

Restricted industry business loans help your business that operates in an industry considered undesirable by lenders.  Lenders are declining and restricting businesses for being in certain industry types, especially during covid-19. Good news business loan information. Get certainty and peace of mind. Click below to get and stick with funding that stays available for you and your business.

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How to get a restricted industry business loan:

  1. Use the list provided to determine if your business type may be considered a restricted industry.
  2. Identify lenders that will lend to your industry.   Contact those lenders and ask for their qualifying criteria.   Select the best match based on your company’s needs and their approval criteria.
  3. If approved, request and review closing stipulations and documents.  Submit all required closing documentation.   Complete merchant call if required.
  4. Receive funds into your business checking account.

    Essential Industry business loan

    What is an essential industry?    An essential industry is an industry that has to be open and operating regardless of the circumstances such as natural disasters,  economic recession, pandemics or public health emergencies.

    These industries must be open regardless.   Investors and lenders consider these industries to be less likely to close for certain risks.    During emergencies, lenders will still lend to these industries because they are in urgent need and will therefore operate and generate revenue.

FAQ Frequently asked questions on restricted industry business loans

What does restricted industry mean for a business loan?

Your business is in an industry the lender does not lend to. Lenders consider it a prohibited industry to lend to usually because they see it as a higher risk for losses and instability. Sometimes the lender simply does not have the expertise in that field.

Why were we declined for a small business loan for restricted industry?

The lender did not want to lend to businesses in your industry or specializes
in certain industry types instead. Ask the lender before applying if they lend to your industry.

My business was denied for being a new business, so what can I do to get approved and funded?

Make sure before applying that any lender and program your business is applying with will approve a new business. Ask if they consider new businesses a prohibited industry they do not lend to.

Can a lender refuse to say if they will not loan to our type of business?

Lenders may not want to say they will not lend to a certain industry. A business loan request declined because of the type of business instead of the ability of the borrower to repay could be questionable so therefore lenders may avoid this issue.

We applied for a business loan and were told we were not in a preferred industry. What does preferred industry mean?

Some lenders have categories of businesses they would prefer not to lend to but do not consider them prohibited. These lenders often call these challenged industries. The trucking and construction as well as used car industries are two examples. Lenders will scrutinize them more and require a longer time in business, higher credit scores and higher revenues.

Restricted industries or elevated scrutiny businesses – examples:

Many industries are restricted by lenders.   For example, restricted industries include:

    1. Financial services and lending.
    2. Accountants, Accounting firms, Accounts Receivables Factoring Companies.
    3. Adult Entertainment, Escort Services, Gentleman’s Club, and adult industries.

Airport companies and Airport related companies, Airlines, and Regional Airline Companies.
Attorneys
ATV Dealers, ATV Sellers and RV Dealers.
Auto and Home Supply Stores.
New Auto Dealerships and used car lots and dealerships.
Auction Houses.
Bitcoin Companies.
Bus Companies.
Construction companies
Cemeteries and Funeral Homes.
Consignment Stores, Child Day Care Services and Churches.
Collection Agencies, Check Cashing Companies, Bail Bond companies, Credit Reporting Services, Credit Protection Services Businesses, Credit Card Protection and Credit Restoration / Repair Businesses and Consulting Businesses.
Collection Agencies, currency exchanges, and Wire Transfer Businesses.
Dating Services and Escort Services.
Debt Consolidation Companies

More restricted industry business loan type companies

Direct Mail Companies.
E-businesses and E-Commerce businesses.
Educational Services, Colleges and Schools.
Factoring Companies, Financial Institutions, Financial Transactions Firearms sales, weapon sales
Financial Transaction Processing, Financial Advisors and Freight Forwarding  Forwarders.
Fitness and Recreational Facilities.
Fraternities and Sororities.
Freight Brokers.
Gambling and Gaming Establishments.
Gas Stations.
Holding Companies, Insurance Agencies,  and Investments.
Home Building, Home Construction, Housing Related Industries, and Home Home based business, other home based businesses.
Health Care.
Horoscope and Fortune Telling.
Import and Export Companies.
Income Tax Preparatory Services, and Income Tax Return Services.
Insurance Agents and insurance brokers.
Internet businesses.
Insurance companies, Insurance Agencies, and  Investment Opportunities.
Lawyers.
Lotteries, Raffles, Gaming and Gambling.

Further restricted industry business loan type companies

Kiosks.
Lawyer and lawyers.  Attorney and Attorneys. Legal practice and Legal Practices.
Marinas.
Mining Companies and Quarrying.
Magazine Subscriptions, Mail Order Coin Sales, Mobile Home Dealers, Mobile Phone Dealers, Wireless Stores and Cellular Stores,
Mortgage Lenders and Mortgage Reduction Services.
Motorcycle and Scooter Dealerships and Motor Home and Camper Dealerships.
Night Clubs.
Non Profit Companies, Not for Profit Companies and Not for Profit Grant Writers.
Non Bank Cash Advance Companies.
Oil Pipelines companies and Oil and Gas field companies
Online Businesses.
Online Stores, Online Retail Stores, Online Merchants, and Online sales.
Payroll Companies, Pawn Shops, Thrift Stores and Consignment Stores.
Personal Trainers.  Precious Metal Sales and Coin Sales.
Printing and Printers.
Real Estate companies, Real Estate Management Companies, Real Estate Investments, and Real Estate Brokers.
Recreational Vehicle Sales

Restricted industry types continued

Schools.
Sports Events Advice, Sports Instruction and Recreation Instruction.
State Agencies and Government Agencies.
Taxi services and Tax Preparation Services
Ticket Brokers, Time Share Investments and Tour Guides.
Travel Agencies, Discount Travel Clubs, Travel Related Companies and Travel Subscriptions.
Tobacco and Electronic Cigarettes, Firearms and Gun Stores.
Trucking Companies, Transportation companies, Logistics Companies and Sea Transportation companies.
Used Car dealers, Auto Dealers, new car dealers and Truck Dealers.
Used Furniture Stores and Furniture Retailers.
Vehicle Inspection Companies.
Virtual Auction Houses.
Vitamin Retailers.
Wholesale Clothing.
Wireless phone and accessories.

Elevated Scrutiny Industries

Other Industries are reviewed with “elevated scrutiny”.
Home health care companies.  Private home care companies.
Web development, Credit and debt counseling.  Financial advisors and consultants.
Elevated Scrutiny industries often include:
Annual Membership Clubs and Appraisal Services.
Auction Houses and Auction Businesses.
Benefit Package Companies.
Boat Sales, Business Opportunity Companies.
Buyers Club and Coupon Book Companies .
Construction companies
Detective services and Private Investigator Services or companies.
Diet companies or Diet program companies.
Donation Companies.   Door to Door Sales companies.
Employment Agencies.

More elevated scrutiny industries

Financial Aid Services Companies.
Flooring companies, Tile Companies, Blinds Companies, Window Companies.
Formal wear companies.
Fortune Teller Companies, Psychics, Astrologers and Spiritual advisors.
Furniture Stores, Home Based Businesses, Homeopathic Remedies and drugs insurance.
Modeling Agencies and Beauty Pageant Organizations.
– Mortgage Lender or Mortgage lenders
Multilevel Marketing and Pyramid Sales.
Online Electronic, High Ticket Electronics, Prepaid Phone Card Companies, Prepaid Phone Card Seminar Companies, Sports Memorabilia Companies, Telemarketing Companies, Ticket Agencies, Time Share Companies and Web Design and Web Hosting Companies.
– Construction companies are Restricted Industry or Elevated Scrutiny.
– Trucking companies
– Utility companies
– Seasonal business

Challenged Industries

Challenged industries are similar elevated scrutiny industries. Underwriting will consider them, but under a tougher review and approval process because of the industry they are in.
Construction Companies:
Lenders often either have restrictions or elevated scrutiny of companies
that work in construction type work.   These companies are either declined
or lower amounts with shorter terms are approved.

Insurance Companies:
Insurance companies are hard to get business funding for.
Travel agencies and convenience stores that sell gasoline often have to payout most of the commissions they get.  As a result, most of the revenue they show coming into their account is not  business revenue.   Only a small part of it is.   Another example is a travel agency which may keep a small percentage of what they receive and payout the rest.    Insurance companies also receive commissions for life insurance the sold but then the have to pay the insurance broker that sold that policy.

Lenders have to make a decision and approval amount based on their real income, or net income.

Industries that are not restricted:

– Restaurants
– Auto Repair

Seasonal Businesses have difficulty getting business Funding:

What is a Seasonal Business?   Definition of a Seasonal Business:

A Seasonal Business is a Business that has it’s Peak Sales and Operations during part of the year.   The remainder of the Year they are either slow or closed.
Examples of Seasonal Businesses include:
Accountants and Tax Preparation Services.
Bridal Wear businesses,  Catering Halls, Floral Businesses,
Moving Companies, Taxi and Limousine Services, Jewelry,  Shipping Businesses, Golf Courses and Ski Resorts. Other seasonal businesses are nurseries, ice cream shops and amusement parks.

Examples of customer case

Santa Fe, NM.   Pueblorides, a used car dealer in the Santa Fe area completed a $45,000 working capital line.  The company is a small used car dealer in the Pueblo, NM area.   Used Car sales are a restricted industry.   We were able to assist them using a small number of business lines available to fund this industry.  They were turned down by several banks and other lenders.  With this funding, they were able to increase the number of vehicles on their lot.

Callers tell us they have been denied for restricted industry or in a restricted industry.

Restricted Industry Business Loans
Loans for Businesses in Prohibited or Restricted Industries

Getting a business loan in a restricted industry

Businesses that have been denied by a lender for being in a restricted industry will have to get a business loan another way.   Ask lenders upfront if they will loan to businesses in your industry.    Find out if  they put businesses into other funding categories.   If so, what are they?    These categories sometimes include the following:

Preferred Merchant List

They may be called a Challenged Merchant List.

If the lender has these categories, they will not tell you.   Ask if they have preferred industries.   Ask if they have restricted industries they do not lend to.    Finally ask if they have industries they label as hard to lend to.  Asking these questions will help you get a restricted industry business loan.   They may avoid unnecessary declines.

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