Small business and loan from banks:

The first place to start when it comes to finding a bank loan or credit is not with your banker, accountant or lawyer but with you! In the case of most small businesses, the business is the owner so your credit history is important in getting a loan.

How good or bad your personal credit history is can influence the bank in lending you money. In the wake of all these big corporate bankruptcies, banks are carefully reviewing all lending practices and trying to mitigate the risks. Before you go into a financial institution for a loan, know your credit history. If you can explain a late payment and know why it is on your credit file then offer your bank a reasonable explanation.

Check your credit history from the big three credit bureaus for missing data, mistakes and omissions. For example, you may have cancelled a $2,000 credit card limit years ago but it can still be on file. The bank will view this as available credit and limited your loan size.

Ordering your personal credit history report from the 3 main credit companies (Equifax, Experian and TransUnion) ranges in price from free to $12.95. Or order a triplicate report from one of the companies. You also have the option to order by phone, mail or online.

So remember the first step to getting the cash you need for your small business is to have a clean credit report.

Rules of Small Business Financing

Change has swept through industries, society, and careers. Over the last few years, change and its companion information technology, is altering the face of small business financing. The decision of loan approval is determined by a computerized credit scoring program, unless a business requires a loan or credit product over $100,000.

Automated credit scoring reduces the subjectivity of the loan process and improves the bank's profitability. Having a relationship with your banker does help in some areas, but not with automated credit scoring.

It may benefit some companies when the subjectivity is removed. For instance, a commercial banker with many failed restaurants in his credit portfolio may be more inclined to decline your loan. The credit scoring system would remove any bias present in the business financing decision-making process. The other possible benefit is credit scoring removes the need for a business plan and only financials are required.

In light of the "new rules" governing the small business financing process for small businesses, the business owner can adopt these strategies:

Small Business Financing Strategies

Assess Credit Needs: If the amount needed is closer to $100,000, apply for $110,000 or more. Usually if the bank wants a business plan, it might not be using a credit model.

Get Your Credit Report: Before making a loan or credit application, obtain your credit report and check for errors and omissions.

Be Accurate: If you are applying for less than $100,000 and the bank is using credit scoring automation, go over all questions for the loan or credit application. Make certain the data you provide is accurate and ask questions to understand the information in the application.

Watch Your Code: Make sure you provide an accurate description of your business. The bank can code your company by NAICS (North American Industry Classification System) or the dated SIC codes. Inaccurate coding can alter the outcome of the approval.

Know Why: If your application is declined ask for an explanation or a "human" review.

Find a Bank:Consider the type of bank you select for applying for small business financing. A larger bank or institution will use the automated credit scoring system more. Seek out local community banks or specialty banks for a particular industry.

The new changes to the small business financing market represent an intensifying competitive industry. Many non-bank players (eg.Intuit, State Farm, GE Capital Corp.) are forcing banks to adapt to the market or lose market share. For the small business owner, this means a greater choice and service as all companies wake-up to the size and power of small business.

Small Business Finance and Small Business Loans

All about money for small business. Handling, managing, finding, and protecting capital for your business.

Small Business Funding and Financing: Finding the Money for Your Business

Finding small business funding is one of the survival skills needed for small business success. Whether you're a start up or growing business, learning the basics of raising capital will go a long way to ensure you stay in business.

5 Small Business Loan Tips

As most business owners will come to know, obtaining a small business loan can be a trying ordeal. Learn what you need to know about getting a small business loan for your business.

The 5 C's of Small Business Loans Qualification

When banks start to tighten lending to the small business market, they look to reduce the risk of issuing a small business loan. To qualify, a small business must understand the risk assessment processes bankers use in loan determinations.

The New Elevator Pitch

The standard elevator pitch is under going a face lift with new media. From reality pitches to Twitpitch, getting clients or investors attention may never be the same again.

Is an IPO Right for Your Business?

An IPO can be an exciting opportunity because it's one way to obtain new capital that can help your company grow and succeed. Despite the lure of such an infusion of cash, an IPO isn't always right for everyone. Discover if and when the time is right for you and your business to "go public."

Debt and Equity Financing: Two Options for Financing Your Small Business

Debt and equity financing are two different financial strategies: Taking on debt means borrowing money for your business, whereas gaining equity entails injecting your own or other stakeholders’ cash into your company.

Small Business Administration Loan Programs Can Help Your Company Grow

The Small Business Administration helps facilitate loans for small businesses. If you think you might need a backer to secure funding, startup SBA loan programs could help your small business find its footing.

Juggling Time to Find an Angel Investor

On a wing and a prayer, an angel investor can help take your company to the next level in one swoop. At what time in your company's lifecycle are angel investors a best option?

6 Steps to Effective Small Business Credit Card Management

With the growing popularity of small business credit cards and ever changing interest rates, now is the time to learn the 6 steps to effective small business credit card management.

Small Business Loan 101

Learn what you need to know to clinch the loan deal. As a small business owner, your most difficult task is finding the money to operate your business. Taking the necessary steps to prepare for a small business loan can minimize the difficulty.

What Check 21 Means to Your Business

Any business operating a business deposit bank account in the U.S., must know the implications of Check 21. Learn what your business needs to know about the new act.

Taking the Accounts Receivable Financing Plunge

When regular small business financing such as loans and credit are limited, some business owners will turn to accounts receivable financing. Is accounts receivable financing right for your business?

Financing Your Business by Private Placement

Private placement offers a viable form of small business financing without the constraints of taking a company public and conceding control.

Free-Up Working Capital in Two Words

Many businesses are asset rich and cash poor. It is possible to free-up working capital and have cash to grow your business in two words.

Small Business Banking 101

Mixing your personal bank account with business is like oil and water, they don't mix. Learn the five reasons not to mix personal & business banking.

Signs Along The Bumpy Road of Business

Operating a successful business requires the ability to see the road ahead. Many businesses fail or go bankrupt simply because the signs were ignored. Take the time to learn the danger signs that can ground your company. The journey will go much straighter in the end.

Getting a Small Business Loan Starts with You

The first place to start when it comes to finding a bank loan or credit for your business is not with your banker, accountant or lawyer but with you. A guide to your personal credit history.

Discover the Rewards of Small Business Bartering

Bartering is a must have success tactic for operating your small business. Learn how bartering can help your small business.

How to Reduce Your Risk of Credit Card Fraud

The explosion in credit card fraud is costing businesses more than consumers. Reason being is consumers enjoy plenty of built-in protections and legal remedies against of credit card fraud. Learn the 10 Steps to Minimizing Credit Card Fraud/

Business Trusts: Scam or Savior?

You may be familiar with the multiple forms of incorporation including sole proprietorship, the limited liability corporation (LLC) and C corporations. However, a less common structure referred to as a business trust has begun to garner some attention. L

Six Ways to Prepare for Deflation

The big "D" word is creeping into the vocabulary of economists and market watchers. This article is what you need to know about deflation and your small business.

174 Types of Capital Defined

Businessfinance.com offers an exhaustive, comprehensive funding directory. This directory covers over 174 kinds of business funding available with definitions and explanations. Learn about bridge loans financing, swing loans or turnaround capital along with plenty of other sources of funding for your business.

Business Credit Forms

FindLaw is a top online legal resource and for small business credit they have all types of credit forms for companies. Includes finance agreements, credit applications, debt collection forms, promissory notes and checklists.

Business Credit Reports

Dun & Bradstreet, Inc. manage your business credit site allows business owners to self-monitor their credit reports throughout the year. Know the vital information your suppliers and the banks will access. Also, access your competitors and clients credit reports for that competitive edge.

Credit Card Processing

BusinessWeek Online BuyerZone has an online form to submit a request for a quote on credit card processing. Fill-in a brief 10 question online form to get the best quote to match your business needs. (U.S. only)

Credit Process Guide

"The Credit Process: A Guide for Small Business Owners" is free and online from the Federal Reserve Bank of New York. Learn about sources of funding, business plans, and loan application preparations. The guide details what exactly the lender will review for the loan approval.

Directory of Commercial Lenders

DMOZ the open directory project lists over 200 commercial lenders available in the U.S. An alphabetical listing with brief explanation of the site.

Lending Activity of Banks in your State.

This site is an absolute must for any small business owner in the process of selecting a bank for credit or a loan. The SBA Office of Advocacy provides an analysis of the data released by the Federal Reserve on the lending activity of about 8,500 individual reporting commercial banks in the United States. Make the best choice in selecting a local bank for your business credit.

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Saturday, June 4, 2011

Small Business Banking and Money