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How to Up Your Chances for a Commercial Loan


Getting a loan to expand a small business can be tricky in today’s volatile economy. But there are various tactics that can greatly enhance an owner’s ability to get approved on a commercial loan application. While there are no magical, instant methods for increasing or establishing a company’s credit score, doing so is the most potent way to make an organization creditworthy.

Start by opening checking and savings accounts in the organization’s name. After that, consider finishing off an incomplete college degree, even if you can only attend online courses on weekends. Other techniques include obtaining small lines of credit from vendors, paying all debts and financial obligations on time, getting personal finances in good shape, applying for a secured corporate card, and more. Here’s how to get started.

Leverage Relationships with Vendors

Work with current vendors by asking if they’ll give you a small line of credit and report it to the three major bureaus. Using this technique with one or more vendors can speed up the process of appearing on the radar of the most important business lenders. Don’t worry if the lines are small. The goal is to use the borrowing power and then pay balances to zero every billing cycle.

Finish College

Having a college degree will not directly affect your organization’s ability to borrow funds. However, it can have a huge indirect influence on gaining customers and earning revenue, no matter what you sell or what kinds of services the company provides. Getting a degree and financing it at the same time can be a challenge for anyone. Fortunately, there are resources available for those who need them, like Going Merry scholarships that can cover a portion of school expenses or the entire bill in some cases.

Whether you end up taking in-person or online classes, the application for scholarship cash is all done online, as is the search process. From the comfort of a computer desk, any entrepreneur can scan for multiple scholarships and apply for as many as they want. Consider finishing a degree to enhance your credibility among prospective customers, clients, and lenders.

Pay All Bills on Time or Early

Many vendors offer discounts on goods and services to companies that pay the full balance within ten days. The 2-10, NET-30 arrangement has been around for decades, and savvy owners are careful to take advantage of the offer. A 2% discount might not seem like much, but the savings add up over the course of a year and have a direct impact on profits, particularly for smaller enterprises. Discount or not, paying on time is one of the core components of long-term creditworthiness.

Apply for a Secured Commercial Card

Ask the bank where you have the company’s accounts for a secured card in the corporate name. Most financial institutions have branded cards for entrepreneurs. The arrangements come with modest interest rates, low spending limits at first, and the chance to begin the credit building process. Expect to wait at least three months before the institution offers an increase in spending power.

Get Personal Finances in Order

Take care of personal indebtedness, with an eye toward getting card balances down, moving excess funds to the business’s account, and being careful to be current on all obligations like mortgages, car payments, personal loans, utility bills, tax payments, etc. If there are delinquencies on your personal reports, get to work clearing them up by notifying creditors and settling as soon as possible. It can take about six months for resolved issues to show up on bureau reports.

Open Checking and Savings Accounts in the Company’s Name

Before launching a new company, it’s essential to open accounts in its name with a trusted local financial institution. Choose either a traditional bank, savings and loan, or credit union. Note that there are small banking establishments that specialize in dealing with local businesses. Regardless of which one you select, remember to establish two accounts, one for saving and another for writing checks or using a debit card.