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How to Have A Stand Out Business Credit Application

How to Have A Stand Out Business Credit Application

By Marco Carbajo, Guest Blogger
Published: August 10, 2016

Getting approved for funding for your business is dependent on your perceived ability to repay the loan or line of credit. That’s why it’s important to make your application for credit or a loan stand out and show that your business is creditworthy.

The business credit application is your opportunity to prove that your business is an appropriate credit risk. To give it an advantage and make it stand out from the pile of applications, implement the following five tips.

1) Check Your Personal Credit Reports/Scores – Knowing where your personal credit stands prior to applying for credit or a loan is essential since one of the major factors lenders use to evaluate your creditworthiness are personal credit reports and scores.

You can obtain your free annual credit report at AnnualCreditReport.com. Be sure to check your report for any mistakes and take the necessary steps to correct them. You can also check your credit scores at MyFICO.

2) Check Your Business Credit Reports/Scores – For your business credit reports, you’ll need to request a report directly from Dun & Bradstreet, Experian Business, and Equifax Small Business. These reports and business credit scores are used to decide not only if your business should be approved, but also what the terms of the loan or credit line will be if approved.

If your business is not listed with any of the business credit reporting agencies then a lender will only have personal credit reports to assess credit risk. If this is the case, consider obtaining your D-U-N-S® Number and set up your company profile with Dun & Bradstreet prior to applying. This will enable lenders to review your company profile with Dun & Bradstreet, a major business credit reporting agency.

3) Supply Strong Trade References - An application that stands out is one that has strong trade references. Strong trade references instill confidence in your ability to repay a loan or line of credit. Typically, applications for business credit will require three to four trade references.

Some suppliers, especially smaller businesses, do not report payment history to the business credit reporting agencies. These are the trade references your company should have information on and ready to supply on a credit application. Remember, trade references are a reliable indicator of a business’s financial health and management. When supplying a trade reference, lenders generally ask for the company name, address, contact name, and business phone number.

4) Supply Company Financials – The cash flow coming in and going out of the business is a key factor in determining your company’s ability to repay a loan or line of credit. Have your financials in order prior to applying for credit since many lenders may ask for your most recent profit & loss statement (P&L), cash flow statement (CFS), bank accounts, assets, investments, etc.

5) Have a Business Plan Document – The majority of business loan applications require a business plan document. The fact is banks still want the standard summary of the company, products, market, team, and financials. This doesn’t have to be a book but a lean business plan document will suffice.  For help on building a business plan check out SBA’s Business Plan Tool. It provides a step-by-step guide to help you get started.

Remember, before you submit your business credit application, review all the information and make sure you are providing as much detail as possible. Above all, remember to be professional, prompt and responsive when a lender requests any additional information or documentation. If you’re rejected, ask what factors impacted their decision and how could you make needed improvements for future applications. 

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.