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What Are Inventory Loans and How are They Affected by the Recession

Inventory loans are short term loans that business owners can use to purchase inventory.  The inventory is the security for the loan.  By taking out this type of loan, a business can stay ahead of demand.  It also allows for taking advantage of special pricing, thus increasing profit. 

Inventory Loans are Not Always a Sure Thing

 Investopedia defines inventory financing as: 

“… a revolving line of credit or a short-term loan that is acquired by a company so it can purchase products for sale later. The products serve as the collateral for the loan.”

These types of loans are a type of inventory financing.  Seeing as these are, at their core, secured loans, it stands to reason that they are easier to get than unsecured loans.  However, that is not always the case. 

Why Inventory Loans are Hard to Get

The idea of inventory as collateral for the financing used to buy it sounds simple enough.  However, after the hard economic downturn of 2008, lenders are much stingier with this type of small business financing.  During that time, it was painfully evident that, if your loan was secured by non-staple items, there was about to be trouble.  

Non-necessities do not sell well in a recession.  If you can’t sell, the bank cannot either. That means the security is pretty much worthless. 

Another issue is that inventory depreciates.  As security, it’s basically on the clock.  If it depreciates to the point of not being worth the amount of the loan, it is worthless as security.  There is also the idea that it may be a fad that is going to quickly go out of style, also not selling. 

These are just a few of the reasons lenders are reluctant to approve loans secured by inventory. Typically, they approve these types of loans on a case by case basis, taking all of these factors into account. Even when they grant approval, it is typically for only around 50% of the cost.

inventory loans Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Ways to Use Inventory Loans

There are some things you can purchase with inventory loans that may surprise you.  For example: 

  • If you run a dining establishment, you can use inventory loans to buy flatware and linens in addition to food supplies. 
  • If you run a salon, you can use this type of financing for towels and supplies as well as items to sell. 
  • A clothing store may use the funds for shoes, accessories, and other items. 

The point is, funds for these loans can purchase items that are not specifically inventory in terms of things that you sell to the public.  They can also purchase supplies for any services you may offer. 

Other Options for Inventory Loans

How do you fill in the gap for the other 50% of inventory costs? Further, how can you finance inventory if you cannot get any type of funding at all?  There are some other options. 

Inventory Loans: Credit Line Hybrid

A credit line hybrid is essentially an unsecured line of credit.  It allows you to fund your business without putting up collateral, and you only pay back what you use.  The funds can be used for many things, including inventory financing. 

 It’s super easy to qualify.  You need a personal credit score of at least 680, and you can’t have any liens, judgments, bankruptcies or late payments.  Furthermore, in the past 6 months you should have less than 4 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards.  It’s also preferred that you have established business credit as well as personal credit.

I know, that doesn’t sound all that easy.  Here’s the catch.  If you do not meet all of the requirements, it’s okay. You can take on a credit partner that meets each of these requirements.  Many business owners work with a friend or relative to fund their business.  If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding. 

Credit Line Hybrid vs. Inventory Loans

There are many benefits to using a credit line hybrid.  First, it is unsecured, meaning you do not have to have any collateral to put up.  Next, this is no-doc funding.  That means you do not have to provide any bank statements or financials.  

In addition, typical approval is up to 5x that of the highest credit limit on the personal credit report. Often, you can get interest rates as low as 0% for the first few months, allowing you to put that savings back into your business. 

Here is another benefit of the credit line hybrid.  With the approval for multiple credit cards, competition is created.  This makes it easier, and likely even if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months. The process is generally quick, especially with a qualified expert to walk you through it. 

Inventory Loans: Alternative Lending

Alternative lenders generally operate online.  They tend to reduce risk by increasing interest rates rather than relying completely on credit information.  This means that they can be an option for those businesses and owners that either have bad credit or have not yet built strong enough credit to qualify for financing with traditional lenders. Here are a few options. 


Fundbox offers a line of credit rather than a loan, but it is a great funding option because there is no minimum credit score requirement. 

They offer an automated process that is super-fast. Repayments are automatic, meaning they draft them electronically, and they occur on a weekly basis.  One thing to remember is that you could have a repayment as high as 5 to 7% of the amount you have drawn currently, as the repayment period is comparatively short.  This means you need to be sure you have enough funds in whatever account you connect them to so that it can cover your payment each week.

inventory loans Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.


Upstart is an online lender that uses a completely innovative platform for loans.  The company itself questions the ability of financial information and FICO on their own to truly determine the risk of lending to a specific borrower.  They choose to use a combination of artificial intelligence (AI) and machine learning to gather alternative data instead.  They then use this data to help them make credit decisions.

This alternative data can include such things as mobile phone bills, rent, deposits, withdrawals, and even other information less directly tied to finances.  The software they use learns and improves on its own. You can use their online quote tool to play with different amounts and terms to see the various interest rate possibilities.  Typically, business loans are available up to $50,000.  Interest rates vary greatly, ranging from 7.5% to 35.99%.  Repayment terms can be either 3 -year or 5-year. 

Fora Financial 

Founded in 2008 by college roommates, online lender Fora Financial now funds more than $1.3 million in working capital around the United States. There is no minimum credit score, and there is an early repayment discount if you qualify.


Obtaining financing from OnDeck is quick and easy. First, you apply online and receive your decision once application processing is complete. If you receive approval, your loan funds will go directly to your bank account. 

Bond Street

Offering term loans of up to $1 million, Bond Street terms are for up to 1 to 3 years. They will ask for both EIN and SSN.

Lending Club

Popular online lender Lending Club offers term loans. Business loans go up to $300,000 and terms from 1 to 5 years are available.

Quarter Spot

Quarter Spot is an online lender that offers short term loans up to $150,000. The terms are 9 to 18 months. 

Rapid Advance

Rapid Advance offers standard, select, and preferred loans. For standard loans, amounts up to $1 million are available. Their terms are 4 to 12 months.


Kiva is an online lender that is a little different. For example, the interest rate is 0%, so even though you have to pay it back it is absolutely free money. They don’t even check your credit. However, there is one catch.  You have to get at least 5 family members or friends to invest in your business. In addition, you have to give a $25 loan to another business on the platform. It’s like a crowdfunding, 0% interest loan.


If your personal credit is okay, Accion may be a good fit for inventory financing. It is a microlender, a nonprofit, that offers installment loans to both startups and already existing businesses. You don’t have to already be in business, but if you are not, you must have less than $500 in past due debt. In addition, your business needs to be home or incubator based. 


Credibly is also a good option if you are already generating some revenue. They offer short term loans for both business expansion and working capital. 

Details related to loan amounts, eligibility requirements, and interest rates change frequently, so it’s best to get that information from the lender’s website directly.  However, many of these either do not check credit or will work with a credit score of less than 600.  Though interest rates are higher than with traditional lenders, they often offer options where there seem to be none. 

Inventory Loans: Credit Cards

In a pinch, you can handle inventory financing with credit cards.  If you pay attention, you can get good introductory rates and rewards.  However, you have to pay attention so you don’t get stuck with high rates once the introductory rates are over.  A better bet is the credit line hybrid, because you can take advantage of all the benefits with an expert to walk you through the process and make sure nothing is missed. 

Inventory Loans: Merchant Cash Advance

In some situations, this can be an option for inventory financing.   This is how it works.  If you take credit card payments, you can get financing based on the average of daily credit cards sales.  Then, payment is taken from future sales.  

The thing is, if you are in a recession, credit cards sales may not be that great, and future sales may not be solid.  However, it is an option that bears mentioning.

inventory loans Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Inventory Loans: Are They Right for Your Business? 

The fact is, every business is likely to need some type of inventory financing in the course of their business. The problem comes when lenders envision large amounts of inventory sitting in a warehouse not selling.  If it’s not selling, then the business isn’t making money and the lender is not getting paid.  

If you sell staples that are needed in most any type of economy, inventory loans can be a good option.  With strong fundability, you may not have any issue getting loans secured by inventory.  However, this is not the case with many businesses.  A lot of business owners find their fundability is not up to par, and they didn’t even realize it.  Couple that with the already unsure nature of getting approved for business loans, and it may be best to go with an alternative. 

While alternative loans are a viable option, the first stop for most business owners should be the credit line hybrid.  It is available to absolutely anyone.  Even if your own credit is not great, the option to take on a credit partner can make this funding source an option for almost anyone.  

The best part is, using the credit line hybrid helps to build the fundability of your business.  This is because the experts that walk you through the process help ensure that, not only get the funds you need right now, but also that your business is set up and prepared to qualify for any type of funding you may need in the future. 

All businesses need inventory funding.  If inventory loans won’t work, there are other options.

The post What Are Inventory Loans and How are They Affected by the Recession appeared first on Credit Suite.

Just what is Business Credit?

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An Introduction to Yelp Ads for Local and e-Commerce Businesses

If you own a business, you know word of mouth is vital to your success.

A glowing review from a handful of customers, or even just one influential somebody, can put your business on the map. And a bad review? Well, that can ruin your reputation. Or at least put a good dent in it.

Before you worry about good or bad, you first need a place to get those reviews.

Here are a few questions to ponder:

  • How can you, as a local business, stand out among your competitors?
  • How can you attract the customer base you want, while also collecting reviews and ratings in one place?
  • Most importantly, how can you interact with consumer reviews to put your business in the best possible light?

Let’s take a closer look at Yelp Ads, Yelp’s various other services, and how they may help.

What is Yelp?

A crowd-sourced business review platform for consumers, Yelp is also an excellent place for businesses to be found online.

Yelp prides itself on being the leading social network for consumer ratings and reviews. 

In its earlier days, the platform was solely consumer-focused. It was a place for customers to leave their reviews without any expectation of a business’s response. 

Yelp has expanded its platform in recent years with Yelp for Business, which gives business owners like you greater control over your listings and consumer interactions. These features go beyond the free page listing that any business can claim.

Yelp for Business Options

Yelp for Business offers two options: self-service and a contract plan.

Self-service is an à la carte offering that allows you to choose from Yelp’s premium business tools. These include:

  • Yelp Ads
  • Yelp Deals
  • Yelp Reservations
  • Business Highlights
  • Profile upgrades

If you choose the contract plan, you’ll work with a Yelp sales representative to create an advertising program that fits your business’s needs. You pay a monthly fee for all the services included in your plan.

Why Yelp for Business May Be Right for Your Business

There’s no doubt that Yelp’s higher-than-average cost per click (CPC) and cost per mille (CPM) have garnered some negative press.

So why might you consider Yelp as part of your overall marketing strategy? 

Yelp users are at a later stage in the buying cycle than those on Google or Bing. Consumers on Yelp are no longer looking for information about a service or product; they’re narrowing their focus to local businesses to make a purchase.

According to a Nielsen study, a whopping 82 percent of Yelp users intend to buy a service or product. So even if only a few hundred consumers per month see your ad, the likelihood of your ad being displayed to a potential customer is high.

Let’s look more closely at one of Yelp for Business’s key offerings: Yelp Ads.

What is Yelp Ads?

An advertising service exclusively targeting Yelp users, this feature displays advertisements to consumers on the platform’s search results pages and business pages, via desktop and mobile. 

How Does Yelp Ads Work?

You can create standard or custom ads linked to your business listing.

The standard ad looks like any search result on Yelp. The difference is it will appear at the top of search page results and on competitors’ profiles:

Yelp Ads SERP review

With custom ads, you can add text snippets, choose a photo, and select the customer review you’d like to feature:

Yelp business listing ad

You can also add value propositions to the bottom of your advertisements, such as sale and deal details or average response time. These are called Business Highlights, and they may be included in your Yelp for Business package or purchased separately.

Yelp local ad

Don’t forget your call to action (CTA). With this add-on feature, you can customize the CTA buttons on your listing page and at the bottom of your search result listings. This allows you to link directly to a relevant page or form on your website.

Like Google or Bing, your ads will display based on search terms, location, and other parameters determined by Yelp’s ranking algorithm.

Your ads can appear on relevant search result pages or competitor business pages across all Yelp platforms. These include the desktop site, the mobile site, and the mobile application (available on iOS and Android).

How to Get Started with Yelp Ads

Do you think Yelp Ads might be right for your business? Here’s how to get started.

Step 1: Claim Your Free Business Listing

If your business is well established, the odds are good that a listing already exists. To claim an existing listing, follow Yelp’s step-by-step instructions.

If your business doesn’t have a listing, it’s easy to register

Step 2: Improve Your Profile

Your profile, also known as a Business Page, is your way to provide accurate information about your business to local consumers. Available fields include business hours, address, phone number, and a list of services and products.

The more accurate your profile is, the greater your chances of converting consumers who find your listing. 

Step 3: Moderate Ratings and Reviews

As a verified business owner, you can respond to ratings and reviews publicly or privately. While you may be tempted to ignore a negative review, this can have a detrimental effect on how consumers view your business.

If you want to keep your business’s online reputation positive, promptly respond to reviews—both positive and negative. 

With 71 percent of consumers saying they’re more likely to do business with a company that has responded to reviews, you can’t afford to miss out on this opportunity.

Step 4: Reach Out to a Yelp Sales Representative

When you choose the self-service option, you can immediately begin using Yelp Ads and other premium features. If you’d prefer a customized plan, you’ll need to work with a sales representative.

How to Optimize Yelp Ads for Your Local e-Commerce Business

In its early years, Yelp gained popularity in the restaurant industry. But as of June 2020, restaurants make up just 18 percent of businesses on the platform. Shopping isn’t too far behind, with 16 percent of companies categorized as such.

As a local e-commerce business, you, too, can benefit from Yelp’s various features. 

Run Location-Targeted Advertisements

If you’re not reaching the right audience, what’s the point?

With Yelp Ads, you can run targeted ads based on consumer location.

As a local business, why might you want to target non-local as well as local consumers? I’m glad you asked!

Let’s say you own a hybrid business, online and in-store. Your physical storefront is in Connecticut, but your dropship warehouse is in Texas. 

Instead of mentioning delivery times, a local Connecticut ad might focus on customers’ ability to purchase online and pick up in-store:

Order online. Pick up in-store today.

But a local Texas ad aimed at customers within a few hundred miles of your warehouse location may read:

Delivery within two business days. Guaranteed.

The same can apply to local businesses like florists and bookstores. Even if you don’t ship to locations outside your local area, you can still appeal to non-local consumers with services you do offer.

Let’s say you’re a florist who offers local delivery services in Albany, NY. Your ads to non-local consumers may look something like this:

Call now for free, next-day delivery within Albany, NY.

But how can you advertise to the right audience?

Target larger metropolitan areas around your locale, or use existing customer data to determine the most likely locations for your non-local consumers. 

Keep Your Business Page Updated

With full control over your business page,  include as much relevant information as possible. 

What does this look like?

Did your business hours change? Or maybe you’re running a sale over the next week. This insight is the kind of information potential customers want to know.

yelp business highlights

Don’t have a physical storefront? You still have plenty of opportunities to flesh out your profile. For example, you can update your business’s:

  • customer service hours
  • refund and replacement policy
  • quality guarantee; or
  • shipping and handling timeframes.

Your customers will appreciate the transparency.

Tweak Your Strategy As Needed

Whether your business is brick-and-mortar or online, adaptability is crucial to success. How are you adapting to the results from your latest Yelp Ads campaign?

You may already use analytics software such as Google Analytics on your website. As a Yelp Ads user, you also have insight into campaign metrics, including:

  • user views
  • customer leads
  • mobile calls
  • CTA clicks
  • directions and map views
  • clicks to your website.

Keep track of campaign metrics, and use that data to adjust your ads and overall strategy. The key is to take a solutions-based approach to your advertising campaign. Here are a few examples.

Low Conversion Rate

You’ve started a new targeted campaign for a nearby metropolitan area. The CTA clicks are the highest you’ve ever seen on a campaign, but the conversion rate is abysmal.

The good news? Your campaign is sending people to your website. The bad news? The likely culprit is the landing page itself. You have three options:

  1. tweak the CTA text to reflect the information on your landing page more accurately
  2. link to a more relevant landing page on your website
  3. rewrite the copy on your landing page to encourage more conversions

Remember that Yelp Ads is just one step on your journey toward conversions. 

Targeted ads can help drive relevant traffic to your website, but if your website is lacking, you’re more likely to lose the conversion.

Low Customer Lead Rate

Now let’s say user views are high, but customer leads are low. What’s the deal? 

First, rule out the usual suspects such as out-of-date profile information and poor ratings or reviews.

Next, consider that your potential customers may be drawn away by sponsored ads on your business profile.

One way to combat this is to purchase a package that enables you to remove sponsored ads from your business page. You may also want to place additional value propositions and CTAs higher on your page, so users are more likely to interact with your website before they even see the sponsored ads below.


For many consumers, Yelp is more than just a ratings and reviews platform. It’s the search engine of choice when it comes to finding a local business for their needs.

You may be thinking, “It’s too late in the game to rank anywhere near the first page in Yelp local results. What’s the point?”

But that’s the beauty of Yelp Ads!

You can ensure your listing is at the top of the search page results every time. And you can experiment with the content in custom ads to see how leads respond. And if you need help setting up paid ad campaigns, set up an initial consulting call.

Even if you don’t intend to use Yelp’s premium services, you can get control of your business page and interact with consumers just by claiming your free business listing.

That leaves me with just one question: 

Have you taken advantage of your free Yelp business listing yet?

The post An Introduction to Yelp Ads for Local and e-Commerce Businesses appeared first on Neil Patel.

How to Establish Business Credit for the First Time in a Recession

As the novel coronavirus changes our economy, you may be wondering if you even can establish business credit for the first time in a recession. You most certainly can! And here’s how.

Establish Business Credit for the First Time in a Recession

Establishing small business credit means that your company gets opportunities you never knew you would. You can get all-new equipment, bid on realty, and cover the company payroll, even when times are a bit lean. This is specifically helpful in seasonal companies, where you can go for calendar months with solely hardly any sales. It’s time to establish business credit for the first time in a recession.

Yes, this can even happen during a bleak economy.

Given this, you should really work on developing your company credit. Improve and maintain your scores and you will have these chances. Do not, and either you do not get these chances, or they will set you back you a lot more. And no company owner wants that. You ought to recognize what affects your company credit before you can make it better.

Establish Business Credit for the First Time in a Recession: Business Credit Building

Small business credit is credit in a business’s name. It doesn’t tie to an owner’s consumer credit, not even when the owner is a sole proprietor and the sole employee of the business.

Thus, an entrepreneur’s business and individual credit scores can be very different.

The Benefits

Considering that business credit is independent from personal, it helps to secure a business owner’s personal assets, in the event of litigation or business insolvency.

Also, with two distinct credit scores, an entrepreneur can get two separate cards from the same merchant. This effectively doubles buying power.

Another benefit is that even startup businesses can do this. Going to a bank for a business loan can be a formula for frustration. But building small business credit, when done correctly, is a plan for success.

Consumer credit scores depend on payments but also additional components like credit usage percentages.

But for business credit, the scores truly just hinge on whether a company pays its bills on a timely basis.

Establish Business Credit for the First Time in a Recession: The Process

Building small business credit is a process, and it does not happen automatically. A company has to actively work to develop business credit.

That being said, it can be done easily and quickly, and it is much speedier than developing consumer credit scores.

Vendors are a big component of this process.

Performing the steps out of order will lead to repetitive rejections. Nobody can start at the top with company credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Establish Business Credit for the First Time in a Recession: Company Fundability

A company must be fundable to lending institutions and merchants.

For this reason, a company will need a professional-looking web site and email address. And it needs to have website hosting bought from a company such as GoDaddy.

Plus, business telephone and fax numbers ought to have a listing on

In addition, the company telephone number should be toll-free (800 exchange or the equivalent).

A company will also need a bank account devoted strictly to it, and it has to have every one of the licenses necessary for running.


These licenses all must be in the accurate, correct name of the small business. And they must have the same small business address and phone numbers.

So bear in mind, that this means not just state licenses, but potentially also city licenses.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!

Establish Business Credit for the First Time in a Recession: Dealing with the Internal Revenue Service

Visit the IRS website and get an EIN for the business. They’re free of charge. Pick a business entity such as corporation, LLC, etc.

A company can begin as a sole proprietor. But they will more than likely want to switch to a variety of corporation or an LLC.

This is in order to lessen risk. And it will take full advantage of tax benefits.

A business entity will matter when it pertains to tax obligations and liability in the event of litigation. A sole proprietorship means the owner is it when it comes to liability and taxes. Nobody else is responsible.

Sole Proprietors Take Note

If you operate a business as a sole proprietor, then at least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the company name. Therefore, you can find yourself being directly responsible for all company financial obligations.

Also, according to the Internal Revenue Service, using this structure there is a 1 in 7 chance of an IRS audit. There is a 1 in 50 probability for corporations! Steer clear of confusion and drastically lower the odds of an Internal Revenue Service audit simultaneously.

But don’t look at a DBA filing as being anything beyond a steppingstone to incorporating.

Establish Business Credit for the First Time in a Recession: Kicking Off the Business Credit Reporting Process

Start at the D&B website and obtain a free D-U-N-S number. A D-U-N-S number is how D&B gets a company in their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the business. You can do this at If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

In this way, Experian and Equifax will have activity to report on.

Vendor Credit

First you need to build trade lines that report. This is also called vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start to get retail and cash credit.

These kinds of accounts often tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first of all, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are usually Net 30, instead of revolving.

Hence, if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!


Net 30 accounts must be paid in full within 30 days. 60 accounts must be paid completely within 60 days. In contrast to with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of.

To launch your business credit profile properly, you ought to get approval for vendor accounts that report to the business credit reporting agencies. As soon as that’s done, you can then make use of the credit.

Then repay what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit – It Makes Sense

Not every vendor can help like true starter credit can. These are merchants that will grant an approval with very little effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 3 of these to move onto the next step, which is retail credit.

Store Credit

Once there are 3 or more vendor trade accounts reporting to at least one of the CRAs, then move to store credit. These are service providers such as Office Depot and Staples.

Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications.

Fleet Credit

Are there more accounts reporting? Then move onto fleet credit. These are service providers such as BP and Conoco. Use this credit to buy fuel, and to fix and maintain vehicles. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make certain to apply using the small business’s EIN.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN. Get money even in a recession!

Cash Credit

Have you been responsibly handling the credit you’ve up to this point? Then move to more universal cash credit. These are service providers such as Visa and MasterCard. Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

These are often MasterCard credit cards. If you have more trade accounts reporting, then these are in reach.

Establish Business Credit for the First Time in a Recession: Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and take care of any mistakes ASAP. Get in the habit of taking a look at credit reports. Dig into the details, not just the scores.

We can help you monitor business credit at Experian and D&B for a lot less.

Update Your Information

Update the details if there are inaccuracies or the information is incomplete.Establish Business Credit for the First Time in a Recession Credit Suite

Establish Business Credit for the First Time in a Recession Fix Your Business Credit

So, what’s all this monitoring for? It’s to dispute any errors in your records. Mistakes in your credit report(s) can be fixed. But the CRAs normally want you to dispute in a particular way.

Get your small business’s PAYDEX report at: Get your company’s Experian report at: And get your Equifax business credit report at:


Disputing credit report inaccuracies typically means you send a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always send copies and keep the originals.

Fixing credit report inaccuracies also means you specifically detail any charges you challenge. Make your dispute letter as understandable as possible. Be specific about the problems with your report. Use certified mail so that you will have proof that you mailed in your dispute.

Establish Business Credit for the First Time in a Recession: A Word about Building Business Credit

Always use credit responsibly! Don’t borrow beyond what you can pay off. Track balances and deadlines for payments. Paying off promptly and completely will do more to increase business credit scores than just about anything else.

Establishing company credit pays off. Excellent business credit scores help a business get loans. Your loan provider knows the company can pay its debts. They understand the company is for real.

The company’s EIN links to high scores and loan providers won’t feel the need to call for a personal guarantee.

Establish Business Credit for the First Time in a Recession: Takeaway

Business credit is an asset which can help your business for years to come. It’s time to get started on how to establish business credit for the first time in a recession. Or at any other time! The COVID-19 situation will not last forever.

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Fall in Love with SBA Loans

We all love a good romance. I mean, falling in love is the stuff of many movies and books throughout the centuries. However, we don’t typically think of romance in relation to business funding.  Honestly, it sounds a little silly. Still, when it comes to SBA loans, there are more than a few reasons to fall in love. Here are 5 of them just to give you a taste.

5 Reasons SBA Loans Could be the Love of Your Life as a Business Owner

The Small Business Administration is, as its name states, designed specifically to be a hero to the little guys.  Who doesn’t love a hero? Whether you need working capital or a natural disaster has struck, the SBA can swoop in and cause you to swoon. 

Overall, there’s a wide range of products offered through SBA programs.  For the most part, the SBA does not lend money directly. In contrast, they work through partner lenders to guarantee small business loans. As a result, they are able to leave the administration of the loans and disbursement of funds to those who do it on a regular basis. 

We’ll make you fall in love with SBA loans with our top 5 reasons.

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Reason #1: More Borrowers Qualify

SBA loans are small-business loans guaranteed by the Small Business Administration and issued by participating lenders, mostly banks. They can guarantee up to 85% of loans of $150,000 or less.  Loans that are more than $150,000 they will guarantee up to 75%. The maximum loan amount they offer is $5 million. 

Above all, this means that since borrowers do not have to guarantee the entire loan themselves, more are eligible for funding through SBA programs than they would be otherwise.  

Who Can Get an SBA Loan?  

To be eligible for SBA loans, you do have to meet these qualifications. 

  • Your business must be for profit.
  • Your business must be inside the US.
  • Business owners must invest equity.
  • All other financial options must be exhausted.
  • Your business must qualify as a small business.
  • Your business must be in an eligible industry.

Reason #2: Plenty of Knowledgeable Partner Lenders

There are SBA partner lenders virtually everywhere.  There are a couple of ways to find one. First, you can contact your SBA district office.  Better yet, use the SBA lender match option.  It’s pretty handy. Basically, all you have to do is enter some general information about your business and what you need funds for.  Accordingly, it matches you with a list of potential lenders that should meet your needs. 

How Does the SBA Choose Lender Partners?  

Surprisingly, not every lender gets to be a partner lender.  The Small Business Administration has a couple of different lender partner programs. Some loan programs are only available from certain types of lenders. For example, SBA 504 loans are only available through a bank, online lender, or a certified development company (CDC.) Community advantage loans are only available through community-based lenders like local banks and credit unions. 

Regardless, all SBA lenders must meet certain criteria. 

SBA’s Certified Lender Program (CLP) 

To qualify to be a CLP, a lender must have some experience and meet certain standards set forth by the SBA. What does it mean for borrowers if their lender is a CLP? Basically, it means that the SBA is able to expedite the application by simply reviewing the credit decision of the lender rather than underwriting the loan itself. 

SBA’s Preferred Lender Program (PLP) 

Lenders in the PLP are more experienced and meet even more rigorous standards than CPL lenders. In fact, they have the ability to underwrite and set their own eligibility standards without the SBA needing to review the application at all.  

Reason #3: Favorable Repayment Terms

One perk of SBA loans is that there is more time to pay them back. According to the Small Business Administration, the terms depend on how you want to use the funds. 

For example, working capital loans, or funds you intend to use for daily operations, have a repayment term of seven years. However, funds for new equipment purchase have a term of 10 years.  Furthermore, real estate loan terms extend even longer to 25 years. Of course, the longer the term the lower the interest. That means lower regular payments.

Reason #4: Better Interest Rates

Speaking of interest rates, because of the government guarantee, lenders are able to offer much more favorable interest rates than they would otherwise be able to.  The exact rate is dependent upon the specific loan program for which you are applying. Still, it is almost always going to be less than it would be without the government guarantee. 

Reason #5: Something for Everyone

There are many types of SBA Loans.  As a general rule, there is something for pretty much any small business need or situation.  Following are the most popular programs. 

7(a) Loans

This is the Small Business Administration’s most popular loan program. One reason is, it offers federally funded term loans up to $5 million. In addition, the funds can be used for expansion, purchasing equipment, working capital and more. Banks, credit unions, and other specialized institutions, in partnership with the SBA, process these loans and disburse the funds. 

The minimum credit score to qualify is 680.  Also, there is a required down payment of at least 10% for the purchase of a business, commercial real estate, or equipment. Lastly, the minimum time in business is 2 years. In the case of startups, business experience equivalent to two years will do the trick. 

Funds are available for a wide variety of projects, from working capital to refinancing debt.  You can even buy a new business or real estate. 

504 Loans 

These loans are available up to $5 million and can buy machinery, facilities, or land. For the most part, they are for expansion. Private sector lenders or nonprofits process and disburse these loans. They especially work well for commercial real estate purchases. 

Terms for 504 Loans range from 10 to 20 years.  Unfortunately, funding can take from 30 to 90 days. They require a minimum credit score of 680, and collateral is the asset the loan is financing. Furthermore, there is a down payment requirement of 10%, which can increase to 15% for a new business. 

Another requirement is that you be in business for at least 2 years, or that management has equivalent experience if the business is a startup. 


Microloans are available in amounts up to $50,000. They work for starting a business, purchasing equipment, buying inventory, or for working capital. Community based non-profits administer microloan programs as intermediaries. Unlike the others, financing comes directly from the Small Business Administration. 

Learn business loan secrets and get money for your business.

Interest rates on these loans are 7.75% to 8% above the lender’s cost to fund.  Also, terms go up to 6 years. Similar to the others, they can take upwards of 90 days to fund. A minimum credit score of 640 is necessary for microloans, and the collateral and down payment requirements vary by lender. 

SBA Disaster Loans 

Disaster loans go up to $2 million.  They are actually processed directly through the SBA. These loans are for small-business owners that have been affected by natural disasters.  Terms go up to 30 years.  The maximum interest rate is 4%, and you can apply for disaster loans directly at

The minimum credit score for these loans is 660. Additionally, collateral is necessary if the loan goes over a certain amount.  That amount is usually $25,000. For a military economic injury disaster, the amount that requires collateral is $50,000. Either way, a down payment is not necessary.

SBA Express Loans 

These loans max out at $350,000.  Moreover, they have a maximum interest rate of 11.50%. Terms range from 5 to 25 years.  In contrast to the others, the SBA guarantee is less, at 50%. To qualify, your credit score must be above 680.  Also, you must have a debt to service ratio of 1.1 or higher. If the loan is greater than $25,000, collateral may be necessary depending on the lender. 

The turnaround for express loans is much faster.  In fact, SBA takes 36 hours or less to give a decision. Not only that, but the necessary paperwork for application is less also.  This makes express loans a great option for working capital, among other things, if you qualify. 

SBA CAPLine Fall in Love with SBA Loans

There are 4 distinct CAPLine programs that differ mostly in the expenses they can fund. Each of them carries a maximum amount of $5 million. In addition, the interest rate for each ranges from 7% to 10%. Like many of the others, funding can take 45 to 90 days. 

The four different programs are: 

  • Seasonal CAPLines 

This is financing for businesses preparing for a seasonal increase in sales. 

  •  Contract CAPLines 

Financing for businesses that need funding to fill a contract. 

  • Builder’s CAPLines 

Financing for businesses taking on a real estate or construction project.

  • Working Capital CAPLines 

Financing for businesses that are struggling with a short-term slump in sales.

For these, the minimum credit score to qualify is 680. However, there is no minimum time in business requirement unless you are getting a seasonal CAPLine. That one carries a one year in business requirement. 

SBA Community Advantage Loans 

This program is a pilot set to either expire or extend in 2020. Its purpose is to promote economic growth in underserved areas and markets. Consequently, credit decision makers overlook factors such as poor credit or low revenue if the business has the potential to stimulate the economy or create jobs in underserved areas. 

Loan amounts range from $50,000 to $250,000 with a maximum interest rate of 11%. Terms range up to 25 years.

SBA Loans: The Application Process

Noticeably absent from this list of 5 reasons to love SBA loans is the application process.  Every rose has its thorn, and SBA loans are no different. While they truly are a fabulous funding option for most small businesses, the application process is not as easy as some other loan processes. 

Even though the government guarantee makes these loans great in a lot of ways, it is that same thing that makes applying for them a little more involved.  

How to Apply for an SBA Government Loan 

The main downside to SBA loans is that they have a lengthy and somewhat complicated application process. There is a lot of red tape involved, but understandably so considering it is the federal government and they are guaranteeing a huge chunk of the loan. Here’s how to start the process.

Gather the Information 

The first thing you have to do is gather the information you will need. This includes:

  • The SBA borrower loan information form 
  • Statement of personal history
  • Personal financial statement
  • Personal income tax returns for the previous 3 years
  • Tax returns for the business for the previous 3 years
  • Business certificate or license
  • Business lease
  • Loan application history

This list, along with links to forms and templates, is available at Once you have this information, you can start looking for a lender. Either contact your local office or use the match tool mentioned above.

Remember, once you and the lender determine which loan program will work best for your needs, there may be additional paperwork.  This is because each loan has its own set of requirements.  

Other SBA Programs

In addition to those programs listed above, the SBA also offers these options that are designed more for specific groups. 

  • Veterans Advantage

 General-use business loans with no guarantee fee for majority veteran-owned small businesses.

  • International Trade

General-use financing for businesses actively involved in international trade or hurt by competition from imports.

  • Export Working Capital Program

Short-term working capital for exporters backed by invoices or other business assets.

Learn business loan secrets and get money for your business.

SBA Loans: A Love Hate Relationship? 

Overall, there are many reasons to fall in love with SBA loans.  Still, they are not perfect. For example, SBA loans offer longer repayment terms and lower interest rates, but there is an extensive and complicated application process. There are low down payment requirements and a variety of loan programs, but the personal credit score requirement is high and there are strict conditions for approval. 

Keep in mind, one benefit of SBA loans that is unique and often overlooked is the support some programs offer before, during, and even after the loan. This can be a huge benefit, especially for those startups with minimal experience. 

SBA Loans: All Relationships Take Work  

Don’t let the longer, more complicated application process scare you away.  For the most part, if you can get an SBA loan it’s a good idea to do so. They offer plenty of support through the longer application process, and the lower rates, lower personal guarantee, and better terms can only help you.  In the long run, if you have the necessary credit score, this is one relationship that is worth working for.  

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