Dress Up Your Credit To Get A Business Loan

It is fairly common knowledge that excessive inquiries on a credit report will have a negative impact on one’s credit.  But there is a widespread misconception as to why the inquiries are considered negative, especially as it relates to the business loans underwriting process.

The universal belief is that each inquiry causes a small one to two point reduction in the FICO and thus, having a large number of inquiries will result in a significant aggregate point reduction.  Although true to some extent, most times when individuals have their credit accessed frequently in a short period of time, it is as a result of shopping for the best rate for an automobile or home loan.  In these cases, such “same industry pulls” as they relate to the FICO score will only count as one pull.  Several years ago, Congress passed a bill that required the credit bureaus to recognize that just because a consumer was shopping for the best rate on a large ticket item, they should not be penalized for being financially responsible and searching for the best deal possbile.  As such, most debt instruments will not decline an application due to excessive inquiries, however, this is far from the case regarding business loans, especially unsecured business loans.

In the unsecured business loans underwriting process inquiries are examined on two levels: amount and type.

• Amount – The number of inquiries on a potential applicant’s credit report are an important factor in underwriting business loans as it typically demonstrates just how much “shopping” for credit that person has done before submitting the most recent application.  Business loan underwriters detest inquiries because they represent hidden financial landmines.  Each prior inquiry means that the applicant has applied for credit with other lending institutions, therefore, there is simply no way the underwriter can determine which of those inquiries will ultimately become new debt on the applicant’s credit over the next several weeks.  Due to the fact that new accounts typically take 30-60 days to begin reporting, inquiries create an unknown variable in the business loan underwriting process that will cause applications to be declined.

Seed Capital maintains a database of all business loan lenders in the nation and understands what bureau each bank will pull and what each bank’s individual inquiry threshold guideline is before it will decline for excessive credit reviews.  This allows Seed Capital to assist its clients in designing a methodical and surgical business loan application strategies taking into consideration exactly what banks and order in which to apply.  This is one of the key contributors to the 98% successful business loan approval rate for clients that utilize Seed Capital’s business loan application consulting.

• Type – In the business loans underwriting process, just as important as the number of inquiries of a potential applicant are the types of inquiries.  Obviously if an applicant has a large number of car loan or mortgage pulls, that will typically not spook a business loan underwriter as it is a reasonable assumption that the individual was shopping for the best rate and those inquiries most likely will result in a new car or home loan which are considered extremely low risk debt.  However, due to the fact that most initial underwriting is done by a computer application, these digital underwriters will not take into account the type of inquiries, only the sheer number.  Therefore, regardless of the reasons for the inquiries, a computer will decline systematically if a certain threshold is reached.  This is why it is extremely important in understanding how to have the application reviewed by a human business loan underwriter whom can override the computer’s decision should the inquiries be for non-unsecured debt instruments.

On the other hand, once a human underwriter reviews the credit and sees numerous inquiries for unsecured business loans or unsecured credit in general, that will weigh heavily on the underwriting decision for a business loan.  Banks are highly fearful of being the last lender to the party.  The last thing a business loan underwriter wants to do is grant another $20,000 approval when the applicant has already been approved for another $100,000 that is not yet reporting to the applicant’s credit report.  This is why underwriters will systematically decline a business loan application for too many recent inquiries and tell the application to reapply for the business loan in 6 months; the safe time period to allow any new credit to start reporting and to make sure the applicant will not overextend themselves with that new credit.

Inquiries are the very reason you have one shot at designing a systematic business loan application strategy.  All too often we have clients come to us that have tried to apply for business loans on their own without the in-depth knowledge of managing inquiries that Seed Capital offers.  And like clockwork, these clients have racked up numerous inquiries and been declined for a majority of their business loan applications.  At that point all we can do is tell them the same thing the underwriters have been telling them; “try again in 6 months.”  Don’t make the mistake of fooling yourself you can navigate the unbelievably complex world of business loans with the same degree of achievement as Seed Capital with its unparalleled understanding of the business loan underwriting world.  Put your faith in Seed Capital and we will guarantee your business loan results with a 98% success rate.

Why You Need A Business Loans Consultant

The Reasons You DO NOT Want to Manage the Business Loan Process on Your Own.

We are often asked, “Why do I need to pay a consultant to assist me in obtaining business loans?  I have perfect credit, can’t I just do it on my own?”  On the surface this statement seems to make perfect sense, however, since the mortgage meltdown and ensuing credit crisis, like Elvis, “sense” has left the bank building.  All the rules have been rewritten on how to obtain business loans and what the banks are looking for and what lending triggers they use to grant a business loan.  Everyday we have new clients that come to us after being turned down by their bank of 20+ years.  This has nothing to do with creditworthiness, but rather, not understanding what programs and lending biases each bank utilizes when underwriting their business loans.  Before you venture down the road of do-it-yourself business loan development and ruin your personal and potentially your business’s credit, please consider the following:

• Lender Selection – In this post subprime lending paradigm, selecting the appropriate lending institution is quite possibly the most important single criteria when beginning the business loan application process.  There are literally hundreds upon hundreds of banks  and credit unions in this country.  Which banks will loan to small businesses with stated income applications? Start-ups?  Do not require collateral?  Have the best interest/promo rate?  The sheer number of banks offering business loans is daunting.  True, each bank will give general guidelines on how they underwrite business loans, however, the actual nitty gritty is proprietary and until an application is submitted, the borrower will never truly know what the bank will do.  Using a trial and error method to figure this out will absolutely ruin your ability to get future credit for yourself and your business.  I can’t count the number of clients that have come to us after trying to obtain business loans on their own.  Unfortunately, at that point their credit has been littered with inquiries and we can only say “sorry, contact us in 6 months and we’ll try again at that point.”  We have developed a systematic business loan application process that includes only the banking partners and programs we know your business can qualify for on the absolute best terms.

• Guideline Changes – Banks’ business loan guidelines and underwriting methodologies are constantly changing.  Strategies to acquire business loans that work today, may not work tomorrow.  This is the very reason Seed Capital has developed the most robust, dynamic lender database in the industry that monitors hundreds of banks and their respective business loan underwriting preferences in real time.  This gives Seed Capital instant access to the what, who and how much a particular bank is lending at any time, allowing our consultants to fashion a lender/business loan application strategy tailored to each our client’s individual needs, credit profile and geography.  This unparalleled understanding of business loan underwriting procedures is the very reason Seed Capital is the only company in the business loan industry that offers an unequivocal performance guarantee.

• Reconsideration Requests – If a bank says no, do you know who to talk to and what to say in order to turn that no into a yes?  Our years of working with business loan underwriters has given us a deep insight into how to use reconsideration requests to get credit approvals.  80% of business loan underwriting is initially done with what is called an automated underwriter (AU) which is a computer program that scrubs the applicant’s credit, considers additional variables such as income and spits out a business loan decision based on that input data.  AU’s are plagued with issues and often decline business loan applications for quirky reasons.  With Seed Capital’s consultation, our clients are able to turn initial business loan declines into approvals roughly 90% of the time.  This is because we are able to analyze the decline reasons, assist the client in formulating a reconsideration request and know exactly which individual in each lending institution they need to speak with in order to get their business loan declines overturned

• Window Dressing – You may think that you have perfect personal credit, however, close to 75% of our clients need some form of “window dressing”.  This is a term we have coined that simply means making minor tweaks to the personal credit report in order to get the most business loan approvals with maximum limits and the lowest rates.  We understand exactly what credit criteria on which the banks base their business loan approvals.  Our consultation can mean the difference in getting a $20,000 business loan on your own, or $150,000 in business loans with our window dressing techniques.

These are just a handful of reasons on why you need an expert to assist you in wading through the intimidating world of business loans.  In the business loans world there is absolutely no substitute for experience and know-how.  Seed Capital will ensure you get the maximum working capital business loan up front and build a perfect business credit rating in just a few short months.  At that point, you will never need to worry about your business’s working capital needs ever again.  GUARANTEED.