Business credit

[Darrell Hayes]

Hi I am trying to build business credit, does anyone know the requirements lenders want when approveing.

such as business phone or is a second phone service app good enough.

Address to business will I know it has to be a real address not a p.o. Box, but ups stores have boxes with real street address. Looking for as much info as I can get. Thanks 

[Mike Hanneman]

They are going to want to see payment history.

I don't think they give much thought as the phone and address. You will want to start out by getting a secured credit card and business bank accounts. Leave as much cash in there as possible and the bank will eventually ask about a revolving credit card, especially after they see you've been making payments on that secured card.

[Account Closed]

Hello Darrell,
I am a commercial credit analyst with a community bank in Los Angeles.

If you're opening a checkings/savings account then we'll usually need the business entity documents, TIN, & signer's government Identification.

The following is what we typically request from a business entity who is applying for a loan :
-Tax ID number
-Corporate/business entity docs filed with the registering state
-Any additional legal partnership and business structure documents
-3 years of business tax returns
-3 years of business profit and loss statements
-business inventory and A/R &A/P statements (for C&I deals)
-guarantors ID
-3 years of personal tax returns
-3 years of personal financial statements

Then we will run background reports for both the business and guarantors, credit report for the guarantors, OFAC reports, industry performance reports and any additional negative news searches.

If the loan is to purchase property, we'll also pull:
-Property profiles
-appraisals
-environmental reports
-title report

[Account Closed]

We will also file UCCs on collateral and run UCC searches and supporting searches to ensure our collateral position is secure.

What type of loan are you trying to get?

[Manolo D.]

Kysha McNeal Can I buy you dinner and talk loans in general under commercial/government lending? I have a lot of questions, looking to see if it's possible to get other type of loan (non-real estate) out there, and how they work, im not new to business but new to business creditworthiness and/or borrowing in general.

[Darrell Hayes]

Thank you  very much @Account Closed

[Stanley Whigham]

Whenever I consult with business clients, I go with them to the bank to apply for business checking accounts. I advise them to open business checking accounts in at least 2 banks. Prior to opening the business checking accounts they do these things: 1) Establish a Dun & Bradstreet profile to reflect 3 years business of experience. If your business has been incorporated less than 3 years, the IRS will allow your sole proprietor experience on your business Employer Identification Number (EIN) application. Next, an online presence is established using your sole proprietor experience in your business listing profiles.  Banks do a Google Search of your business name and address while asking questions about your company's gross sales, net income, number of employees-- you need 5, etc. Your company online presence will show 2 pages on Google with your business occupying all ten spaces, i.e., the whole page. When your business shows up on 2 pages of Google, your business has established a good advertising presence and passes the first test.  2) Get an office in a commercially zoned area. Banks can tell if you are using virtual offices or UPS boxes. They feel it shows lack of stability in business. Go to an older part of town where rents are cheaper.  3) Maintain your good credit (700+) -- it is your key to getting a business credit card while opening business checking accounts and fast-tracking your business credit development.  Most banks will give you a business credit card with a $7,500 credit limit when you take the time to establish a good D&B profile, get a business phone (Google Voice is a voice over ip and is considered a landline), address and online presence. With one business credit card, you can leverage your business credit profile very quickly. When your card(s) come in the mail, go apply for a COSTCO business credit card (with bank business credit card in hand). Soon (3 - 6 months), you will have multiple credit lines established on all 3 business credit bureaus. Large unsecured lines can be obtained once a favorable bank rating is established for 3 months at your new business bank accounts. Now your company can survive beyond 5 years because it has working capital for emergencies.

[Matt Reilly]

@Stanley Whigham Hello Stanley! That was GREAT advice and even better break down. I am in the beginning stages of starting my D&B profile (just got my DUNS number). If you had the time, could you PM me so I can ask a few questions about what you wrote. I've been searching forum topics for hours and you gave the best advice. Thank you!

[Luis Roel]

It definitely helps to have good credit but as a hard money lender, it's not something we really care about. We're more concerned about what your bank statements show and that your credit history is clean. 

Meaning, no bankruptcies, no late mortgage payments, little to no delinquent accounts, etc. And more than anything we're concerned with experience. Is this your first project? How many flips have you successfully completed in the last six months? In the last 12?

As you develop a relationship with your lender and build a good payment history, credits matters even less.