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Credit & Lending

25 Posts authored by: SBC Team

 

TRANSCRIPT:

If you’re a small business owner and you’re opening a bank account or applying for credit, you’re probably prepared for questions about your revenue and credit history. But you may also be asked detailed questions about your company’s ownership.

 

Due to a federal regulation designed to prevent money laundering and fraud, lenders may ask you to supply specific information about who owns or runs your company. The regulation doesn’t apply to everyone.

 

If you operate a business with no partners or controlling managers, lenders aren’t going to ask you for this extra information. If you do have partners—considered to be those with a 25% equity stake—or controlling managers—those with significant decision-making authority, like a CEO or COO—then you are affected and will want to be prepared.

 

If the rule applies to you, lenders will ask for certain information about your partners or controlling managers. They’ll need basic identifying information for U.S. citizens. Or in the case of non-U.S. citizens, they’ll ask for foreign passport details and an identity document.

 

To make the process easier and quicker, gather this information to take with you when you meet with your small business specialist. If you have questions, schedule an appointment with a small business specialist, which you can do by phone or in person.

 

Speak with a Small Business Specialist today.  bankofamerica.com/Appointment

 

Visit our Credit & Lending Resource Center to learn more.

 

Bank of America, the Bank of America logo and Life / Better Connected are registered trademarks of Bank of America Corporation.

 

2018 Bank of America Corporation

Now that you’ve gotten familiar with the loan choices the SBA offers, you may be ready to apply. Here, we give you a step-by-step checklist of everything you need to do to complete and present the necessary paperwork and cover all your bases.

How to Apply for an SBA Loan− SBA Loans Guide Part 3

 

You can also read Part 1: "Overview" here and Part 2: "Types of Loans" here.

 

Click here to download the SBA Loans Overview guide (PDF).

 

 

Learn more about Small Business Administration Loans
& Financing through Bank of America.

There are several types of loans available from the Small Business Administration (SBA).

 

What is a Small Business Administration loan?

In part 2 of our 3 part series, discover all the loan choices at your fingertips, so you can do your due diligence, compare your choices, and select the one loan that’s perfect for your business.

 

You can also read Part 1: "An Overview of SBA Loans" by clicking here and How to Apply for an SBA Loan− SBA Loans Guide Part 3.

 

Click here to download the Types of SBA Loans guide (PDF).

 

 

Learn more about Small Business Administration Loans
& Financing through Bank of America.

Does your business need a loan? Consider one from the Small Business Administration (SBA). In our three-part series, you can explore all your SBA loan options to make a more informed decision and get the loan that fits your business needs best.

What is a Small Business Administration loan?

 

Part 1 provides an overview of what SBA loans are and how they can benefit your business. You can read about the different types of SBA loans in Part 2 by clicking here.

 

Click here to download the SBA Loans Overview guide (PDF).

 

 

Learn more about Small Business Administration Loans
& Financing through Bank of America.

Credit and Lending Collection: Credit insight for every step of your business journey.

Our library of resources below can assist you whether you’re applying for credit for the first time, trying to build it or looking for a fresh start.

Understanding business credit scores Lenders May Now Ask These Questions About Your Company's Ownership How to Establish Credit for Your Small Business Why you got declined for business credit Infographic: Building Credit for Your Small Business How Your Personal Credit Impacts Your Business Credit Building Better Credit with a Secured Credit Card 5 C's of Credit: What Are Banks Looking For? Borrowing Options for Small Businesses What is a Business Line of Credit & How Does it Work? Eight Ways to Maintain and Repair Good Business Credit Small Business Financing Tips: Banks, Family and Additional Resources How to Assess New Lending Sources An Overview of SBA Loans - SBA Loans Guide Part 1 Types of SBA Loans − SBA Loans Guide Part 2 How to Apply for an SBA Loan− SBA Loans Guide Part 3 Understanding SBA Loans: What To Know Before Applying Tapping the SBA: What Works for Your Business A Small Business Microfinance Loan Might Be Right Size for You CDFIs: Promoting small businesses and economic development Help grow your small business with a CDFI loan Need Capital? Consider a CDFI

SBC Team

Need Capital? Consider a CDFI

Posted by SBC Team Apr 20, 2018

If you’re a small business owner looking for capital, you may want to consider looking into Community Development Financial Institutions, or CDFIs—organizations that specialize in lending to small businesses. While approval rates are higher than at traditional banks, there are pros and cons. Check out our infographic to learn more about whether a CDFI fund might be right for your business.

 

Bank of America Business Advantage

NEED CAPITAL?
CONSIDER A CDFI

It can be tough for a small business to get access to credit—but it can be easier if you know where to look. According to the Federal Reserve Small Business Credit Survey, in 2016, 77% of small business applicants for loans or lines of credit at Community Development Financial Institutions (CDFIs) were approved.

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SO WHAT IS A CDFI AND COULD ONE HELP YOUR SMALL BUSINESS?

CDFIs are lenders that help certain small business owners gain access to capital.

Banks, credit unions, loan funds, microlenders or venture capitalists may serve as CDFIs.

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HOW THEY WORK:

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A region, population or group may face certain economic challenges.

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The federal CDFI Fund, run by the Department of the Treasury, issues loans, grants, deposits or equity investments to local CDFIs.

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Banks also help fund those local CDFIs, helping them to provide financial assistance and mentoring. Bank of America sends millions of dollars each year to different CDFIs.

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The businesses grow in their communities, helping revitalize them.

BORROWING THROUGH A CDFI IS DIFFERENT THAN SECURING A BANK LOAN OR LINE OF CREDIT. CDFIs OFFER CERTAIN PROS AND CONS.

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PROS

Approval rates of 77% at CDFIs, vs. 67% at small banks and 54% at large banks.1

Rates are often competitive with other common funding sources.

Many are geared toward working with start-up and early-stage companies.

Like Bank of America customers, borrowers have access to business education and support, such as help with business plans.

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CONS

Not every business is eligible; borrowers may need to reside in a certain area or be part of a specific population (e.g., women- or minority-owned).

There may be caps on loan amounts.

Funding time may be slower than traditional lenders.

INTERESTED?

Figure out if there's a CDFI that could work for you by checking the U.S. Treasury's tool, or try the Bank of America CDFI locator.

Remember: If you decide to apply for CDFI financing, be prepared—they may operate differently than your bank and ask for other information.

 

Click here to download a PDF version of this infographic.

A good business credit score may help your business qualify for better rates on credit cards, loans and lines of credit. So how do you find out what your business credit score is and see what’s on your business credit report? Plus, how do you improve your score if it’s not where you’d like it to be? Check out our infographic.

 

Bank of America Business Advantage

WHAT’S A BUSINESS CREDIT SCORE?

You’re probably familiar with your personal credit score—but did you know your business may have one, too? It also may have its own credit report. A good business credit score and report may help your business qualify for better rates on credit cards, loans and lines of credit.

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Even someone who knows their way around a personal credit score and report may be surprised when it comes to their business.

Here are some of the key differences between personal and business credit.

WHO ISSUES THE SCORE

PERSONAL CREDIT

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Just 3 agencies issue scores: Experian, Equifax and TransUnion.

BUSINESS CREDIT

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Scores come from a variety of vendors who collect data about your business and create reports. Three of the largest are Experian, Dun & Bradstreet and LexisNexis.

THE NUMBER

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300 to 850. All 3 agencies use the same scale.

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Variable, depending on the issuer. For example, Dun & Bradstreet PAYDEX scores range from 1 to 100; LexisNexis scores fall between 222 and 900.

WHAT'S IN THE REPORT

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Personal credit information, including history with creditors such as mortgage lenders, auto finance companies and credit cards.

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Business credit information,including payment history with creditors such as trade finance providers, history of business credit cards and lines of credit.

STANDARDIZATION

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All 3 reports will look similar, with minor variances.

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There’s no standardization, so a report from one vendor may include information about a certain vendor or creditor that another does not.

While your personal and business scores are different, your personal score can affect your business score. So keep an eye on it.

WANT TO IMPROVE YOUR BUSINESS SCORE?

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Pay all bills on time.

This is one of the most important factors when it comes to your credit score.

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Maintain positive cash flow.

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Reduce debt.

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Review your scores periodically and update your business profile.

This includes reporting business income.

To find out more, please visit a financial center or speak with your banker.

 

 

 

Click here to download a PDF version of this infographic.

Getting denied for business credit is frustrating, but knowing why you were turned down can help improve your chances next time. From your cash flow to your utilization ratio, this infographic breaks down the common reasons small businesses are turned down and explains steps to take before reapplying.

 

Bank of America Business Advantage

BUSINESS CREDIT:
IF YOU GET DECLINED

When a bank considers your application for business credit, they take a close look at your history with creditors and billers—as well as reviewing your company’s financials. These are some of the reasons applications are declined.

YOUR CREDIT

REASON FOR DECLINE 02-mini-icon-x.png
Your payment history is unsatisfactory.

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Your personal or business credit report shows a pattern of late or missed payments.

WHAT YOU CAN DO 02-mini-icon-star.png
Always pay on time. It can take years for blemishes to fall off your report completely, but consistent, on-time payments will help.

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REASON FOR DECLINE 02-mini-icon-x.png
You have a lack of established revolving credit.

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Your credit report doesn’t show a long history with credit cards or other creditors.

WHAT YOU CAN DO 02-mini-icon-star.png
Time is one of the most important factors in your credit history. The longer you can show a pattern of on-time payments, the better. Applying for a secured credit card is one way to build your history.

REASON FOR DECLINE 02-mini-icon-x.png
You’re using too much of your credit.

WHAT IT MEANS 02-mini-icon-check.png
Lenders dislike when you’re using all—or even most—of the credit that’s available to you.

WHAT YOU CAN DO 02-mini-icon-star.png
If you can, keep your utilization ratio—the percentage of credit you’re using vs. total available credit—as low as you can.

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REASON FOR DECLINE 02-mini-icon-x.png
You’ve filed for bankruptcy.

WHAT IT MEANS 02-mini-icon-check.png
A past personal or business bankruptcy may affect your chances of securing new credit.

WHAT YOU CAN DO 02-mini-icon-star.png
In the coming months and years, work to improve cash flow, boost revenue, cut expenses and improve your credit score. You can also look into a Community Development Financial Institution (CDFI) loan, which may have different requirements.

YOUR BUSINESS

REASON FOR DECLINE 02-mini-icon-x.png
Your business has insufficient revenue.

WHAT IT MEANS 02-mini-icon-check.png
The lender is concerned that your revenue can’t support increased credit.

WHAT YOU CAN DO 02-mini-icon-star.png
Consider a smaller amount or a collateral-backed loan or credit line.

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REASON FOR DECLINE 02-mini-icon-x.png
Your business doesn’t qualify.

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Not every service or business is eligible. For instance, to qualify for certain credit products, Bank of America requires your business to be under current ownership for at least two years. And some products have minimum revenue requirements.

WHAT YOU CAN DO 02-mini-icon-star.png
If your business hasn’t been around long enough, try again when it has. Or consider a CDFI loan, which may have different requirements.

REASON FOR DECLINE 02-mini-icon-x.png
Your business has insufficient cash flow coverage.

WHAT IT MEANS 02-mini-icon-check.png
The lender thinks you don’t have enough cash flow to make payments on new debt.

WHAT YOU CAN DO 02-mini-icon-star.png
Consider a smaller amount or a collateral-backed loan or credit line.

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YOUR BANKING RELATIONSHIP

REASON FOR DECLINE 02-mini-icon-x.png
You have sufficient credit with your bank already.

WHAT IT MEANS 02-mini-icon-check.png
Even if you have great qualifications, a bank may not want to exceed a certain amount of credit exposure.

WHAT YOU CAN DO 02-mini-icon-star.png
If you have unused credit lines, close them. If not, you may need to consider other sources.

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ADMINISTRATIVE REASONS

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REASON FOR DECLINE 02-mini-icon-x.png
It’s a duplicate application.

WHAT IT MEANS 02-mini-icon-check.png
If you’ve applied for the same product within the last 90 days, it’s considered a single application.

WHAT YOU CAN DO 02-mini-icon-star.png
Wait it out.

Getting turned down for business credit is frustrating, but knowing why it happened can help improve your chances next time.

To discuss your needs and find the solutions that work best for your business, please contact a small business banker.

 

 

 

Click here to download a PDF version of this infographic.

If getting credit for your small business is proving to be an uphill climb, you may want to look into a secured credit card. Not only can it help you build or reestablish the credit you need now, but also possibly provide a stepping stone toward an unsecured credit card or bank loan in the future.

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Click here to download a PDF of this infographic.

How to repair business credit When it comes to your small business, better credit could mean bigger possibilities. Improving your company’s credit score — and in some cases, repairing it — could help you take full advantage of opportunities that may fuel your business growth.

 

Learn the ins and outs of building a solid foundation of good business credit with our new guide.

 

Click here to download the guide "Eight Ways to Maintain and Repair Good Business Credit" (PDF).

Now that you’ve gotten familiar with the loan choices the SBA offers with, you may be ready to apply. Here, we give you a step-by-step checklist of everything you need to do to complete and present the necessary paperwork and cover all your bases.

 

You can also read Part 1: "An Overview of  SBA Loans" here and Part 2: "Types of SBA Loans" here.

 

How-to-apply-for-an-sba-loan.gif

 

Click here to download a PDF version of this infographic.

Need a loan? Consider one from the Small Business Administration. In our three-part series, you can explore all your SBA options to make a more informed decision and get the loan that fits your business needs best.

 

SBA-Loans-Overview-Thumb.gifPart 1 provides an overview of what SBA loans are and how they can benefit your business. You can read about the different types of SBA loans in Part 2 by clicking here.

 

Click here to download the SBA Loans Overview guide (PDF).

There are several types of loans available from the Small Business Administration. In part 2 of our 3 part series, discover all the loan choices at your fingertips, so you can do your due diligence and select the one that’s perfect for your business.  You can also read Part 1: "An Overview of  SBA Loans" by clicking here.

 

Types-of-SBA-Loans.gif

 

Click here to download a PDF version of this infographic.

 


 

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Watch the video below to see a brief comparison of the different lending products and features, to help you understand how credit options can support every stage of your business journey.

 

SBC Team

The 5 Cs of Business Credit

Posted by SBC Team Jul 12, 2016

When it comes time to secure financing for your small business, it’s important to know going in what lenders are looking for. And while it’s true that many lenders have their own unique underwriting requirements, most follow “The 5 Cs.”

 

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Click here to download a PDF of this content.

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