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The Small Business Administration (SBA) is the first place every start-up business person and entrepreneur thinks they should go for small business grants. There is good and bad news on this: Yes, it is a great first place to go when you are starting your business because they provide free counseling and financial assistance, however, the SBA itself does not hand out free grant money to start or expand a business. Anyone who tells you otherwise is mistaken, or pulling your leg.

The SBA is an independent agency of the federal government and its purpose has remained the same since its creation in 1953. According to their website the purpose of the SBA is “To aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.” The primary way in which the SBA does this is not by providing grants, but by administering low interest loans, or loan guarantees, which give small business owners like you access to start-up money from private lenders all over the nation. These are loans that you might not otherwise be able to get without the guarantee from the small business administration. The SBA does not directly provide you with small business financing, they are an intermediary and they contract with private lending institutions in every State. A loan guarantee from SBA gives a bank the added security it needs to lend you money. If the borrower’s business doesn’t get off the ground as quickly as planned and the business ends up defaulting on the loan the SBA will repay all or part of the loan – usually about 40% of the loan will be guaranteed.

This type of financial assistance may not be as good as free grant money, but if it is money you can actually get your hands on reasonably quickly, on decent terms, and the repayment schedule can fit within your budget, then it’s a great deal and probably your best option as far as financial assistance from the Small Business Administration. If you need a line of credit at any point in your business start-up or expansion, be sure to check out these SBA resources. Keep in mind that even if in the past you have been unable to borrow money elsewhere, it doesn’t mean you won’t be able to get business financing now. A loan guarantee from SBA will help you secure financing when it would otherwise be unobtainable based on your credit, perceived ability to repay the loan and other factors. They also have programs and ways of streamlining the application procedures necessary to provide financial assistance to the small business community. Read more of this >>

One of the most important ways to achieve and maintain excellent FICO credit scores is to carefully manage your revolving credit.

When I say, “revolving credit,” I’m referring to any credit account you have where the monthly payment can vary. Credit cards are the most common form of revolving credit.

Of course, “revolving credit” refers to almost everything in your wallet or purse that’s plastic that you can use to buy something. This includes American Express, Discover, MasterCard, or Visa credit cards. This also includes retail store cards such as Macy’s or Target, and gasoline cards.

The exceptions are check cards and debit cards. These little dudes may be plastic and have a MasterCard or Visa logo, but they aren’t really credit cards. They’re more like plastic checks than anything else. Debit cards have nothing to do with your credit scores.

Why your credit reports can show that your credit cards are maxed out when they’re not

In my case, my credit scores were lower than they should have been because I was using my personal credit cards for my business. An easy fix…I just applied for a corporate card and began using only that card for anything business related. (You should do the same if you have a small business.)

A few small business leases were also reporting as revolving accounts on my personal credit reports. Those were simple to resolve by just paying the small amounts off.

Then, I did a quick analysis of my credit reports.

The only way to really discover if revolving credit is lowering your scores is to do a quick analysis of your revolving credit accounts. (I’ll show you how at the end of this newsletter.) That’s how I found the big culprit that was destroying my credit scores…

Beware of home equity lines of credit

When I analyzed my credit reports I got a big surprise…I discovered several of my home equity lines of credit (HELOCs) were being misinterpreted as credit card accounts.

This was fooling the FICO scoring model into thinking that I had an enormous amount of credit card debt. But of course, I didn’t.

What I learned was that HELOC accounts can look exactly like a credit card account on your credit reports.

When I was trained by Fair Isaac Corporation, I got a different story. I was told there are two situations when a HELOC won’t be mistaken as a revolving credit card: Read more of this >>

The problem: American consumers have an estimated $2 trillion credit card debt collectively, and the total debt seems to be going higher. Personal bankruptcies are on the rise. It’s been estimated that 8 out of 10 of these same consumers have never received any sort of meaningful, practical education in personal finance.

But you’re different. You’ve worked hard to improve your credit score by making sure you’ve paid all major credit cards on time every month without fail. But consider this: could a late payment to the local video store rental club unravel all you’ve achieved?

A record number of credit card companies have built “universal default” clauses into their agreements, which allow them to raise your interest rate if you’re late making a payment — even to someone else!

Is there such a danger lurking in the fine print of your credit card contract (blithly referred to as “the agreement” by the companies)? Is there a nasty surprise waiting inside your next monthly credit card statement?

Lately, news reports of more and more people becoming aware of the so-called “universal default” clause buried in the fine print in their credit card agreements; becoming aware not because they were curious about this heavy-handed new trend, but because they have been personally affected by the clause — a clause that sometimes spikes the monthly revolving interest rate up as high as 30%!

How could this happen, you say? Well, some credit card companies — apparently on a new search to implement new fees to increase corporate profits — have introduced this onerous high-interest penalty on their customers. Read more of this >>

The word “success” is defined differently by different people. Success for some means money while for others it could be the name and fame factor. For an entrepreneur, success would mean maximization of profits and gaining recognition. An entrepreneur must be creative and confident; must have the passion, vision and mission to achieve set objectives. You may possess all these qualities, but do you have the necessary capital needed to start up or expand the business. If not, then unsecured loans can work as a significant source of finance for you.

Unsecured business loans do not require a borrower to put collateral against the loan. An unsecured business loan is an ideal source of funds for tenants who do not have a property to put against the loan. Homeowners who do not want to put their property at risk can also apply for an unsecured business loan.

Business is filled with uncertainty; you may earn huge profits one year or big losses the other month. In such circumstances, when returns are uncertain, an unsecured business loan is the best alternative. Unsecured business loan can be used to purchase fixed assets which involve huge investment for starting up a new venture or to expand the existing business. Unsecured business loan can also be used to meet the working capital requirement of a business.

Amount that borrowers can borrow with an unsecured business loan depends on their credit history and the lender they choose to borrow from. Usually, loan providers offer an unsecured business loan within a range of $30,000 to $250,000.
Read more of this >>

A business stands firm on the ground with the help of funds. Every business man would know that without finances one can’t establish or advance a viable business plan. Not everyone is born with the kind of money required for furthering a business plan. Bad credit is so prevalent and this is the reason why we have bad credit business loans.

In practice, bad credit cannot prevent you from having bad credit business loans. Bad credit business loans can be difficult to find but they are certainly not impossible to find. Writing a good business loans application is key to getting it approved. There are a few things that the lender won’t neglect while providing you with business loans for bad credit. Business plan and its feasibility are crucial for bad credit business loans. Along with that lender will look for equity, collateral and repaying ability.

Now credit history is fundamental to getting a business loan approved. Since you have bad credit, you should start with your credit score. Obtain your credit report from any of the three credit reporting agencies – Experian, Trans Union and Equifax. Many people are unable to understand what the report and credit score signify. Credit score is given after studying the data in the credit history –

• Late payments

• The amount of time credit has been established

• The amount of credit used versus the amount of credit

available

• Length of time at present residence

• Employment history

• Negative credit information such as bankruptcies, charge-offs, collections, etc.

A Bad credit business loan lender will usually use a FICO score to identify your bad credit. Fico score ranges from 340-850. The lower your score is the chances are you might be seen as a greater credit risk. Any business loan borrower with a credit score below 600 is considered as bad credit. Here the business loans application will be approved with the added compensation of higher interest rates and down payment. Higher interest rate is attached to bad credit business loans. Research would be an investment worth it while finding a bad credit business loan. Comparatively low interest rates are possible for bad credit business loan. Read more of this >>

Need a business loan but you’re not sure how to build a business credit profile?

Financing is a critical part of growing a small business. Nothing is more important to the health of a small business than having the right financing in place.

Building business credit is about establishing on time, or early, payment histories and having those payment histories reported to the three business credit reporting agencies. Therefore, building your business credit takes time, careful planning, and being educated on what steps to take. The following are steps to Building Business Credit.

1. Create a Legal Business “Entity”. In order to create and build a “business credit profile” that is separate from your personal credit, you will need to structure your business as a Corporation or LLC. If you need help establishing your business entity, go to www.mycorporation.com and review your online options.

2. Apply for an EIN. Business credit is tracked using your business name, business address and employer identification number (EIN). You may apply for an EIN from the IRS online at www.irs.gov. Every corporate entity must file a SS-4 form with the IRS to obtain their EIN. Read more of this >>

These days, good credit isn’t enough. The average person can save more money and get more options than they think just by improving their credit. People who are launching new careers, businesses, or major creative projects are not “average” people, though. For them, outstanding credit is critical to their long term financial stability. In fact, achieving outstanding credit is the first key step to success in any business or creative startup. This is because the interest rates charged on various types of accounts including business loans, mortgages, home equity loans, auto loans, credit cards and even insurance are dictated by your credit score. The higher your credit score, the less you pay. And the less you pay, the more profitable you will be in both your business and personal life. Aside from the few borrowers who fall into the “stellar” credit realm, typically considered to be a 760 FICO score or above, most entrepreneurs can benefit from credit improvement resulting in major savings down the road. Fortunately, improving your credit score can often be achieved in 5 steps or less.

Step 1: Pay your bills on time.
Late payments have a huge impact on your credit score. In fact, payment history is the number one factor in determining your credit score. Late payments can also severely impact your ability to fund a business or creative project. If you are behind on payments, get caught up and stay caught up. The longer you have a history of paying on time, the higher your score will be. There is a common belief that it’s okay to pay late as long as you are paying the balance in full. This is simply not the case. A late payment that paid an account in full will count against you the same as a late payment that paid only the minimum due. In addition, late payments on some types of accounts have more of an impact than those of others. For example, a late payment on a mortgage account will have a worse impact on a credit score compared to late payments on other types of accounts. Following is the prioritization of accounts in order of highest impact on credit score to least: mortgage loans, home equity loans, auto loans, installment loans, credit cards, and then other various account types.

Step 2: Keep your account balances low.
Amounts owed are the number two factor in determining your credit score. For the best results on your credit score, keep your balances below 40% of your available credit on your credit card accounts. Once your balance is above 40% of the available limit, you start losing points off your score. Often we see a client who has five credit cards, four of which have zero balances and then one that is basically maxed out. This could be a situation where all of the account balances were transferred to the account that offered the lowest interest rate. Consolidating debt onto one low interest rate card can be an excellent way to save money but, if this results in using more than 40% of the available credit on that one account, your score will drop. In a case where your number one priority is to improve your credit score, an alternative would be to distribute the balance across several of the accounts so that you do not exceed the 40% threshold on any of them. Another option is to contact the creditor and request an increase in available credit, resulting in an automatic decrease in the percentage of credit used (assuming you don’t increase your balance owed.)

Step 3: Pay down your debt.
It’s important to pay more than just the minimum payment due each month so that you can eventually pay off your debt all together. As your amounts owed are reduced, you may see a quick boost in your score. For example, paying down $750 on a $2200 credit card balance could raise your score as much as 20 points. Think of practical ways that will help you to pay down your debt. I suggest a two fold approach. First, think of areas where you can eliminate unnecessary spending, both business and personal. For instance, one area might be eating out. Eating out one less time a week could save you over $2000 a year (based on dinner for two at $40 total per dinner.) The second step is to make the debt reduction automatic. If you’ve eliminated $200 a month in spending, set up an automatic monthly payment on the account that has the highest interest rate and have that automatic payment include an additional $200 a month on top of your usual payment amount. You will find that this quickly adds up and results in noticeable improvements both in your debt situation and on your credit score.

Step 4: Keep your oldest accounts open.
Length of history is the third most important factor that goes into your credit score. The longer you can show you’ve been managing good credit, the higher your credit score will be. One mistake that many people make is to pay off an account balance and then promptly call to have the account closed. What they don’t realize is that, if this is one of their older accounts, doing so will actually cause their score to drop. Therefore, before you close an account, check the date it was opened and be sure to keep the older ones open.

Step 5: Fix errors on your report.
Errors frequently show up on credit reports and many have a negative impact on credit score. Because of this, it’s important to review your report annually and to address any such issues immediately. For advice on correcting errors, “7 Steps to Fixing Your Credit Report,” an article by Holden Lewis of Bankrate.com, is an excellent resource.

Don’t be discouraged by the fact that improving your credit score takes specific steps, work, and time. Each positive step you take will increase your credit score. People frequently see powerful changes within as little as 3 – 6 months. Ultimately, this will mean more opportunities and financial stability as you build your business and career.

Additional Resources
myFICO.com
The most comprehensive resource for credit education. Provides information, tools and products to help you become a credit genius.

AnnualCreditReport.com
An excellent resource that offers free credit reports from all three credit bureaus.

How to Go From Credit Repair to Credit Millionaire by Donna Fox. Covers credit repair and building business credit.

The Automatic Millionaire and The Automatic Millionaire Workbook by David Bach. Two resources on money basics, including credit, by one of the foremost money gurus.

The Money Book for the Young, Fabulous, and Broke by Suze Orman. Excellent resource on money, credit, planning, and investing for people in their 20’s and 30’s who are just starting out.

Michelle Webb, The Credit Coach, helps individuals getting ready to launch business or creative startups to reduce stress, save time & money, and reach their dreams faster by making them financially stronger for life while boosting their credit power today. Through extensive one-on-one credit coaching, she teaches you about credit and money, makes them easy to understand, and looks at the whole picture so you can draft a long term plan. Michelle knows the road to financial achievement and provides the resources to get you there! For more information on credit coaching services, contact michelle@yourcreditpower.com