| Recently I shared the benefits of building business | | | | Low 4 - $1,000 - $3,999 |
| credit with each of the business credit agencies. | | | | Low 5 - $10,000 - $39,999 |
| Separation of personal and business credit is a | | | | Mid 4 - $4,000 - $6,999 |
| must for small business owners in order to | | | | Mid 5 - $40,000 - $69,999 |
| eliminate personal liability and protect the integrity | | | | High 4 - $7,000 - $9,999 |
| of the corporate veil. | | | | High 5 - $70,000 - $99,999 |
| While this strategy creates a Paydex, Small | | | | Bank ratings consist of three factors... |
| Business Credit Risk Score, and Intelliscore for | | | | 1. The first factor is your balance rating. This |
| your business it's not the only rating you should | | | | rating is your average minimum balance |
| pay close attention to. | | | | maintained in your account over a three (3) |
| Your business will also need to establish effective | | | | month period. $10,000 will rate as "Low 5?, $5,000 |
| 'Bank Credit'. | | | | rates as "Mid 4?, $999 rates as "High 3?, and so |
| Bank credit is totally separate from building | | | | on. You need to maintain a minimum "Low 5" |
| business credit and in no way affects your ability | | | | bank rating ($10,000) for at least 3 months. |
| to build strong business credit scores. | | | | Unfortunately, without at least a "low 5? rating, |
| "Bank Credit" makes your business more credible | | | | most lenders will assume your business has little |
| in the eyes of lenders. In this article, I want to | | | | ability to repay. |
| share with you the '3 Main Components of Building | | | | 2. The second factor is the bank rating cycle |
| Bank Credit' which are: | | | | which is three (3) months. You'll want to have at |
| Business Bank Account & History | | | | least a low 5 for the three months prior to |
| Bank Rating Number | | | | applying for larger loans. |
| Obtaining Your First Business Bank Loan | | | | 3. The third and final factor has to do with how |
| So let's get started! | | | | you manage the account. NSF (bounced) checks |
| Business Bank Account | | | | destroy bank ratings. From this point forward, |
| The first step in establishing positive bank credit is | | | | NSF checks are something you can't let happen. I |
| to make sure that your business name and | | | | would suggest that you add overdraft protection |
| mailing address, as listed on your business bank | | | | to your account as soon as possible. |
| account, matches exactly how your business | | | | Obtaining Your First Business Bank Loan |
| name and address appear on any legal paperwork | | | | Getting your first business loan from a bank can |
| that's been filed with the State. It must also | | | | seem like an impossible task. The majority of the |
| match exactly with the name and address that | | | | business loan applications at banks get declined |
| appear on your Federal EIN paperwork. If it | | | | because banks won't lend to just anybody ... or |
| doesn't match you'll have to correct it | | | | will they? |
| immediately! | | | | This one business bank loan strategy provides a |
| Business Bank History | | | | powerful boost to building business credit fast. |
| Most lenders also determine the age of your | | | | The business bank loan needs to be in the exact |
| business by the date you first opened your | | | | name of your company. It should be under your |
| business bank account and not the date that | | | | Federal EIN and report to the business credit |
| appears on your Incorporation, LLC, or EIN | | | | agencies, specifically Equifax Small Business and |
| paperwork. However, in some instances banks | | | | Corporate Experian. |
| may also require 24 months seasoning from the | | | | So how do you accomplish this? Under this Bank |
| start date of your business as well. | | | | Loan Program you will be securing a business loan |
| Your business banking history is vital to your | | | | with a certificate of deposit (CD) at the bank that |
| ability of being able to secure larger business loans | | | | is extending the business loan. You'll make a |
| with banks. Lenders will look to see how long that | | | | deposit into a CD account at an SBA preferred |
| relationship has been established, so once you get | | | | lending bank. Then, you receive a business loan |
| your account set-up don't change banks! | | | | for 100% of the value of the CD. |
| The longer your business banking history, the | | | | This process works very well and works every |
| better the borrowing potential you have. | | | | time as long as you're personal credit scores are |
| Bank Rating Number | | | | not in the low 500 range. If your scores are in |
| Your business bank account reflects how you | | | | the low 500's, it's best to try smaller business |
| manage your cash flow. Lenders want to know | | | | banks and talk to an individual banker first. |
| that your business cash flow is capable of handling | | | | The Benefits of a Secured Bank Loan |
| the business debt and expenses on a consistent | | | | It will appear on your business credit report just |
| basis. Bank accounts with low average daily | | | | like any other loan. There will be no note in the |
| balances, or that show many NSF returned | | | | file, or on credit reports, that show it as |
| checks, can get your business loan applications | | | | "secured". It will make your business credit report |
| declined right away. | | | | stand out to other lenders and creditors who |
| If a loan amount requires a $1,000 month | | | | obviously know how difficult it is to get a business |
| payments then lenders need to see at least a | | | | bank loan. |
| "Low 5? bank rating. Your "Bank Rating" is based | | | | If you're personal credit is a large issue and you |
| on your average daily minimum balance over the | | | | just can't find a business bank to do the CD |
| last 3 months. | | | | program for you ... don't worry. You can still build |
| Bank Ratings | | | | your business credit without the bank loan; the |
| Account Balance | | | | bank loan just makes it faster. |