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HI, EVERYONE, WELCOME TO THE SMALL BUSINESS SUCCESS VIRTUAL CONFERENCE BROUGHT TO YOU BY SCORE.AND WELCOME TO THIS WEBINAR, SMALL BUSINESS LOAN APPLICATIONS?-- WHY ARE THEY ASKING ME THAT BEING SPONSORED BY ONDECK.MY NAME IS ALEXA ELLIOTT WITH SCORE, I'LL BE MODERATING THE SESSION TODAY.OUR PRESENTER IS TY KIISEL, WHO IS A CONTRIBUTING EDITOR WITH ONDECK, THE AUTHOR OF "GETTING A BUSINESS LOAN: FINANCING YOUR MAIN STREET BUSINESS" AND HAS SPENT OVER 30 YEARS IN THE TRENCHES OF MAIN STREET BUSINESS AS A BUSINESS EVANGELIST.BEFORE TURNING THE SESSION OVER TO TY, I WOULD LIKE TO MAKE MENTION OF A FEW HOUSEKEEPING ITEMS.THIS WEBINAR WILL LAST AN HOUR, IT'S BEING RECORDED.A LINK TO THE RECORDING AND THE SLIDE DECK WILL BE E-MAILED TO ALL PARTICIPANTS.WE HAVE SET ASIDE TIME FOR Q & A AT THE END OF TODAY'S PRESENTATION.IF YOU HAVE ANY QUESTIONS PLEASE SUBMIT THOSE USING THE Q & A BOX LOCATED ON THE LEFT-HAND SIDE OF YOUR SCREEN.PLEASE USE THE SAME BOX IF YOU EXPERIENCE TECHNICAL DIFFICULTIES AND NEED ASSISTANCE.NOW WE'LL BEGIN "SMALL BUSINESS LOAN APPLICATIONS?-- WHY ARE THEY ASKING ME THAT."I WOULD LIKE TO BRING TY ON THE LINE NOW.>> HELLO.I'M EXCITED TO BE HERE.THESE ARE GOING TO BE QUESTIONS THAT YOU GET ASKED EVERY TIME YOU GO INTO A LENDER AND I THINK THAT OVER THE YEARS, AS I'VE TALKED TO SMALL BUSINESS OWNERS, THEY ASK ME A LOT ABOUT WHY ARE THEY ASKING THAT?WHY IS THAT AN IMPORTANT QUESTION?SO LET'S JUST DIVE IN.I THINK THERE'S A LOT OF FINANCING OPTIONS AVAILABLE TODAY THAT WEREN'T AVAILABLE IN YEARS PAST.I KNOW WHEN I WAS A SMALL BUSINESS OWNER THEY WEREN'T AVAILABLE.I BELIEVE THERE'S MORE OPTIONS AVAILABLE TODAY THAN EVER BEFORE, HOWEVER YOU NEED TO BE SAVVY IN HOW YOU APPROACH FINANCING.THE ONE SIZE FITS ALL APPROACH THAT YOU USED TO BE ABLE TO DO WITH GOING INTO THE BANK, JUST DOESN'T EXIST ANYMORE.YOU NEED TO UNDERSTAND WHAT YOUR CREDIT PROFILE LOOKS LIKE.YOUR BUSINESS CREDIT, PERSONAL CREDIT, BOTH ARE IMPORTANT.WE'LL TALK ABOUT THAT MORE.YOU NEED TO UNDERSTAND YOUR FINANCIAL SITUATION AND WHAT THE NUMBERS ARE TELLING YOU.I WAS SPEAKING WITH A LENDER A FEW YEARS AGO WHO SAID IF I CAN TELL MORE ABOUT A SMALL BUSINESS'S BUSINESS BY LOOKING AT THE NUMBERS THAN THEY CAN, I PROBABLY WON'T GIVE THEM A LOAN.IT'S IMPORTANT THAT YOU UNDERSTAND A HANDFUL OF PRETTY IMPORTANT FINANCIAL METRICS.YOU NEED TO BE ABLE TO IDENTIFY WHICH OPTIONS ARE GOOD FOR YOUR BUSINESS AND WHICH OPTIONS ARE NOT.THERE ISN'T A ONE SIZE FITS ALL SITUATION ANYMORE, BUT THERE'S LOTS OF?-- LET'S CALL THEM SPECIALTY TYPES OF FINANCING FOR SPECIFIC USE CASES, SOME WILL BE BETTER FOR YOUR PARTICULAR USE CASE THAN OTHERS.IT'S IMPORTANT AS A SMALL BUSINESS OWNER THAT YOU ARE ABLE TO DETERMINE WHICH ONES ARE THE BEST FOR YOUR SITUATION.THAT DOESN'T MEAN YOU HAVE TO BE A FINANCIAL EXPERT, BUT YOU DO NEED TO HAVE A BETTER IDEA AS TO WHAT TYPE OF FINANCING IS BEST SUITED FOR YOUR PARTICULAR NEED.AND YOU NEED TO UNDERSTAND WHAT POTENTIAL LENDERS ARE LOOKING FOR.WE'RE GOING TO TALK ABOUT THAT TODAY.SO WAS ARE LENDERS LOOKING FOR?BASICALLY THERE ARE THREE QUESTIONS THAT A LERNER WILL WANT TO HAVE AN ANSWER TO.NUMBER ONE, CAN YOU REPAY THE LOAN?WILL YOU REPAY A LOAN, WHICH IS DIFFERENT THAN CAN YOU.IT'S WILL YOU.THEY'LL LOOK AT YOUR TRACK RECORD.SOME QUESTIONS THEY ASK ARE ABOUT HOW YOU PERFORMED IN THE PAST, WHAT YOUR TRACK RECORD IS.AND THEY WANT TO KNOW THAT YOU HAVE A PLAN TO MAKE EACH AND EVERY PERIODIC PAYMENT ON TIME REGARDLESS OF WHAT HAPPENS WITHIN YOUR BUSINESS.UNFORTUNATELY THEY PROBABLY AREN'T GOING TO ASK THE QUESTIONS THIS WAY.SO WE'RE GOING TO TALK ABOUT SOME OF THE QUESTIONS THAT THEY WILL ASK BECAUSE THESE ARE THE ANSWERS THAT THEY'RE LOOKING FOR.SO IT'S NORMAL TO ASK, IF THEY DON'T ASK THE QUESTIONS LIKE THAT, WHAT ANSWERS ARE THEY LOOKING FOR?IF I DON'T KNOW WHAT THE QUESTIONS ARE, HOW WILL I GIVE THEM THE RIGHT ANSWERS?SO LET'S DIVE IN.THERE'S A HANDFUL OF QUESTIONS THAT WE JUST NEED TO TALK ABOUT TODAY.ASK YOURSELF THESE TEN QUESTIONS BEFORE YOU APPLY, BECAUSE IN ONE WAY OR ANOTHER YOUR LENDER IS PROBABLY GOING TO ASK THESE QUESTIONS.WE'LL GO THROUGH EACH QUESTION AND MAYBE EXPLAIN WHY THEY'RE ASKING AND WHAT IT SAYS ABOUT YOUR BUSINESS AND HOW IT WILL IMPACT YOUR ABILITY TO QUALIFY FOR A LOAN.QUESTION NUMBER ONE WHAT DOES YOUR BUSINESS NEED THE MONEY FOR?I CALL THIS THE LOAN PURPOSE.WHAT'S YOUR LOAN PURPOSE?IT WILL, IN MY OPINION, IT'S THE FIRST QUESTION THAT YOU SHOULD ASK AND IT WILL DRIVE ALL THE OTHER ANSWERS TO MANY OF THESE QUESTIONS.YOU KNOW, IF YOU'RE BORROWING TO PURCHASE QUICK TURNAROUND INVENTORY, FOR EXAMPLE, THAT'S A DECIDEDLY DIFFERENT BUSINESS NEED THAN BUYING A BIG PIECE OF CONSTRUCTION EQUIPMENT OR REAL ESTATE TO BUILD A NEW BUILDING OR TO MOVE YOUR?-- TO ADD ANOTHER LOCATION ACROSS TOWN.WHAT DOES YOUR BUSINESS NEED THE MONEY FOR IS AN IMPORTANT QUESTION NOT ONLY FOR YOU TO ASK, BECAUSE IT'S GOING TO HELP YOU DECIDE WHAT TYPE OF FINANCING MAKES THE MOST SENCE, BUT SOME LENDERS SPECIALIZE IN SPECIFIC TYPES OF FINANCING.FOR EXAMPLE, IF YOU'RE BUYING EQUIPMENT THERE ARE LENDERS THAT SPECIALIZE IN EQUIPMENT FINANCING.IF YOU'RE BUYING REAL ESTATE, THERE'S LENDERS THAT SPECIALIZE IN THAT.SO THIS IS A VERY IMPORTANT QUESTION.AND IF IT'S NOT THE FIRST QUESTION YOUR LENDER ASKS, IT WILL PROBABLY BE ONE OF THE FIRST QUESTIONS.SO YOU NEED TO HAVE AN ANSWER TO THIS.IN MY JUDGMENT, THE MORE SPECIFIC THE ANSWER CAN BE THE BETTER IT'S GOING TO HELP YOU WITH THE APPLICATION.IF YOU WANT TO EXPAND YOUR RESTAURANT'S OUTDOOR DINING AREA, IT'S BEST TO BE ABLE TO ARTICULATE THAT.THAT YOU HAVE SOME CONSTRUCTION YOU NEED TO DO, YOU NEED TO BUY TABLES AND CHAIRS, OR BENCHES OR WHATEVER, AND IT'S GOING TO REQUIRE THIS MUCH MONEY TO GO OUT AND DO THAT.THE MORE SPECIFIC YOU CAN ARTICULATE WHAT YOUR BUSINESS LOAN PURPOSE IS, THE BETTER.HOW MUCH ARE YOU SEEKING TO BORROW?HOW MUCH MONEY DO YOU REALLY NEED?WE LIVE IN A WORLD TODAY WHERE POPULAR MEDIA WANTS US TO BELIEVE THAT THE ONLY THING WE NEED TO SOLVE BUSINESS PROBLEMS IS ADDITIONAL CAPITAL, WHICH IS NOT NECESSARILY THE CASE.I'M NOT ONE OF THE SALES GUYS, I DON'T OFTEN TALK TO PEOPLE IN THIS REGARD.BUT I DO OCCASIONALLY TALK TO SMALL BUSINESS OWNERS.I'LL ASK THEM WHAT'S YOUR LOAN PURPOSE.THEY'LL GIVE ME SOME KIND OF AN ANSWER.THEN I'LL ASK THE NEXT QUESTION, HOW MUCH MONEY DO YOU NEED?I CAN'T EVEN TELL YOU HOW MANY TIMES THE ANSWER IS, HOW MUCH CAN I GET?WHICH IS, IN MY OPINION, THE WRONG ANSWER.I GREW UP IN A SMALL BUSINESS WITH MY DAD AND HE WAS OF THE OPINION THAT IF BORROWING DIDN'T HAVE ADDITIONAL PROFITS OR INCREASE THE VALUE OF THE BUSINESS, YOU SHOULDN'T BORROW FOR IT.THE LOGIC IS THAT REGARDLESS OF WHERE YOU FIND CAPITAL, BORROWING HAS COSTS ASSOCIATED WITH IT.IF YOU BORROW MORE THAN WHAT YOU NEED, OR YOU BORROW FOR SOMETHING THAT YOU DON'T REALLY NEED, IT PUTS YOUR BUSINESS UNDER ADDITIONAL FINANCIAL STRESS.SO I DON'T RECOMMEND YOU BORROW MORE THAN YOU NEED.ADDITIONALLY SOME LENDERS SPECIALIZE IN DIFFERENT LOAN SIZES THAN OTHERS.FOR EXAMPLE, IF YOU GO INTO THE BANK, THEY'LL WANT TO LEND A HALF MILLION DOLLARS TO A MILLION DOLLARS TO A COMPANY THAT'S BEEN AROUND FOR A WHILE.OTHER LENDERS SPECIALIZE IN LOANS OF 20,000, 30,000, $40,000.STILL OTHERS SPECIALIZE IN LOANS OF 5,000, $10,000.IF YOU KNOW YOUR LOAN PURPOSE, YOU KNOW HOW MUCH MONEY THAT YOU'RE ACTUALLY GOING TO NEED, IT'S GOING TO HELP YOU GO TO THE RIGHT LENDER AND GET THE RIGHT LOAN THAT IS BEST SUITED FOR YOUR BUSINESS.QUESTION NUMBER THREE, YOU KNOW YOUR PERSONAL CREDIT SCORE?I AM 100% IN AGREEMENT, IF YOU'RE SAYING WHAT DOES MY PERSONAL CREDIT SCORE HAVE TO DO WITH MY BUSINESS CREDIT?YOU KNOW, IT PROBABLY DOESN'T HAVE A LOT TO DO WITH IT OTHER THAN IT SAYS A LITTLE BIT ABOUT YOU.SOME LENDERS RATE YOUR PERSONAL CREDIT SCORE HEAVIER THAN OTHERS WHEN THEY ARE DOING A BUSINESS CREDIT WORTHINESS VALUATION.FOR MOST SMALL BUSINESSES YOUR PERSONAL CREDIT SCORE IS ALWAYS GOING TO BE PART OF THE EQUATION.SO IT'S IMPORTANT THAT YOU KNOW WHAT YOUR SCORE IS, AND THAT YOU KNOW HOW IT STACKS UP AGAINST EVERYONE ELSE.FOR EXAMPLE, IT CAN MAKE A DIFFERENCE AS TO WHERE YOU WILL QUALIFY FOR A LOAN.FOR EXAMPLE, IF YOU GO IN TO THE BANK, THE BANK WANTS TO SEE A CREDIT SCORE?-- A PERSONAL CREDIT SCORE IN THE 700 RANGE.SOMETIMES THEY'LL DROP DOWN TO 680.BY IN LARGE THEY WANT TO SEE 700 CREDIT SCORE OR BETTER.THE SBA WILL OFTEN DROP AS LOW AS 650.THEY WANT TO SEE HIGHER, BUT SOMETIMES THEY'LL DROP DOWN TO 650.OTHER LENDERS, ONLINE LENDERS LIKE ONDECK WILL GO LOWER THAN THAT.SO YOUR PERSONAL CREDIT SCORE IS ALWAYS GOING TO BE A PART OF THE OCCASIONS.IT'S A BIGGER OR SMALLER PART OF THE EQUATION DEPENDING UPON THE LENDER YOU GO TO.IT COULD IMPACT THE INTEREST RATE YOU END UP PAYING IN THE END.SO MY ADVICE IS TO MONITOR YOUR PERSONAL CREDIT SCORE.MAKE SURE YOU KNOW WHAT IT IS.MAKE SURE YOU KNOW WHAT RANGE IT'S AT, SO THAT WHEN YOUR BANKER ASKS YOU OR WHEN YOUR LENDER ASKS YOU, YOU ALREADY KNOW.SO YOU HAVE AN IDEA AS TO WHAT IT IS.IF YOU DON'T KNOW WHERE TO FIND YOUR PERSONAL CREDIT SCORE.IT'S REALLY CONVENIENT BECAUSE THE FEDERAL GOVERNMENT HAS MADE IT A LAW THAT ONCE A YEAR YOU CAN CHECK YOUR PERSONAL CREDIT SCORE FOR FREE.YOU CAN BE AWARE OF WHAT'S GOING ON.I SUGGEST THAT YOU DO IT MORE FREQUENTLY.IN FACT, I DON'T THINK MONTHLY IS TOO FREQUENTLY.AS HUMAN BEINGS WE TEND TO IMPACT THE METRICS THAT WE PAY THE MOST ATTENTION TO.SO IF YOU HAVE A LESS THAN PERFECT CREDIT SCORE AND YOU'RE PAYING ATTENTION TO WHAT IT'S DOING EVERY MONTH, YOU'RE MORE LIKELY TO TAKE THE ACTIONS THAT WILL IMPROVE YOUR SCORE OVER TIME.YOU KNOW, KNOWING WHAT YOUR CREDIT SCORE IS, UNDERSTANDING THE RANGES, WHAT IS GOOD, WHAT'S NOT, THAT WILL HELP YOU WHEN YOU GO TO APPLY FOR A LOAN.QUESTION FOUR.HOW LONG HAVE YOU BEEN IN BUSINESS.THIS IS AN IMPORTANT QUESTION.THIS IS IMPORTANT BECAUSE DIFFERENT LENDERS REQUIRE DIFFERENT LENGTH OF TRACK RECORD.FOR EXAMPLE, IF YOU GO INTO THE BANK, THEY'LL WANT TO SEE, YOU KNOW, A THREE-YEAR, FOUR-YEAR, FIVE-YEAR TRACK RECORD.THEY WANT TO SEE SEVERAL YEARS IN BUSINESS.IF YOU GO TO A LERNER LIKE ONDECK, THEY WANT TO SEE A YEAR IN BUSINESS.PROBABLY THE MOST DIFFICULT PHASE OF A BUSINESS FOR FINANCING IS THE STARTUP PHASE.REMEMBER THE QUESTIONS, CAN YOU REPAY A LOAN?LENDERS WANT TO SEE REVENUE.WITHOUT REVENUE THEY ARE NOT GOING TO GIVE YOU A LOAN.LENDERS ALSO WANTED TO KNOW IF YOU WILL REPAY A LOAN.THE ONLY WAY THEY CAN TELL THAT IS BY LOOKING AT YOUR TRACK RECORD AND WHAT YOU'VE DONE IN THE PAST.SO THE NUMBER OF YEARS YOU HAVE IN BUSINESS IS REALLY IMPORTANT.THAT DOESN'T MEAN YOU HAVE TO WAIT TO START BUILDING YOUR BUSINESS CREDIT.I WOULD SUGGEST THAT YOU DON'T WAIT, THAT YOU START RIGHT AWAY.WE'LL TALK ABOUT SOME OF THAT IN A MINUTE.JUST BEING AWARE THAT THE FIRST YEAR OF BUSINESS, IT'S GOING TO BE DIFFICULT TO GET FINANCING, YOU'RE MORE THAN LIKELY GOING TO NOT FIND MUCH SUCCESS LOOKING FOR A LOAN.QUESTION FIVE, DO YOU KNOW HOW YOUR BUSINESS CREDIT SCORE IS RATED?THIS IS IMPORTANT.IF THERE'S SOMETHING THAT SURPRISES SMALL BUSINESS OWNERS ABOUT CREDIT, IT IS, NUMBER ONE, THAT THEY HAVE A BUSINESS CREDIT SCORE, NUMBER TWO, HOW IS IT DIFFERENT THAN YOUR PERSONAL CREDIT, AND NUMBER THREE, HOW DO YOU LEARN ABOUT YOUR BUSINESS CREDIT PROFILE.YOU KNOW, AS SOON AS YOU START YOUR BUSINESS AND YOU REGISTER WITH THE STATE WHERE YOU DO BUSINESS, YOU START DOING BUSINESS, YOU START BUILDING A CREDIT PROFILE.BASICALLY WHAT THEY'LL DOING IN THE BEGINNING IS PULL DATA ABOUT YOUR BUSINESS FROM THE PUBLIC RECORD.HOW BIG YOUR BUSINESS IS, HOW MUCH MONEY?-- HOW MUCH REVENUE YOU DO HOW MANY EMPLOYEES YOU HAVE.ALL THAT STUFF.SO THE PUBLIC RECORD IS AN IMPORTANT SOURCE OF INFORMATION FOR THE BUSINESS CREDIT BUREAUS.THEY ALSO WILL LOOK AT HOW DO YOU MEET YOUR FINANCIAL OBLIGATIONS AS FAR AS YOUR LEASE PAYMENTS, OR YOUR UTILITY BILLS, OR YOUR?-- IF YOU HAVE SUPPLIERS OR VENDORS THAT YOU HAVE TRADE CREDIT WITH, DO YOU MAKE ALL THOSE PAYMENTS ON TIME?ONE OF THE BEST THINGS YOU CAN START DOING, AS SOON AS YOU START A BUSINESS IS BUILD TRADE RELATIONSHIPS WITH YOUR VENDORS AND SUPPLIERS.IT'S NOT UNCOMMON FOR VENDERS AND OTHER SUPPLIERS TO OFFER 30-DAY OR 60-DAY TERMS TO THEIR BEST CUSTOMERS.THIS IS A GREAT WAY TO START BUILDING YOUR CREDIT PROFILE.I KNOW IT'S NOT A LOAN.IT'S PROBABLY NOT GOING TO BE THE $100,000 YOU NEED TO EXPAND OR WHATEVER YOUR GOAL IS, BUT IF YOU SPEND TIME IN THAT FIRST YEAR BUILDING TRADE RELATIONSHIPS, IT WILL HELP YOU WHEN YOU DO NEED MONEY TO EXPAND OR TO BUY INVENTORY OR TO BUY EQUIPMENT OR WHATEVER.IT WON'T GUARANTEE THAT YOU GET AN APPROVAL, BUT IF YOU'RE HAVING A GREAT RELATIONSHIP CREDIT WISE WITH YOUR SUPPLIERS, THAT'S REFLECTED IN YOUR CREDIT PROFILE.IT WILL BENEFIT YOU IN THE APPLICATION FOR A LOAN DOWN THE ROAD.WHEN I SAY THAT YOU ALSO NEED TO MAKE SURE CREDITORS LIKE THIS REPORT YOUR GOOD HISTORY TO THE CREDIT BUREAUS.SOME VENDORS AND SUPPLIERS MIGHT NOT.THIS IS IMPORTANT.IF THEY DON'T, IT MAY BUILD YOUR CREDIT REPUTATION WITH THAT PARTICULAR VENDOR OR SUPPLIER, BUT IT'S NOT GOING TO HELP YOU WITH YOUR CREDIT BUREAUS AND YOUR BUSINESS CREDIT PROFILE IN GENERAL.MAKE SURE AND ASK IF THEY DO.AND TAKE ADVANTAGE OF THAT.ANOTHER WAY YOU CAN START BUILDING YOUR BUSINESS CREDIT IS TO APPLY FOR A BUSINESS CREDIT CARD.THEY'RE RELATIVELY EASY COMPARED TO A LOAN TO QUALIFY FOR.THEY REPORT YOUR CREDIT HISTORY TO THE CREDIT BUREAUS.THEY HELP YOU BUILD BUSINESS CREDIT.MY ONE PIECE OF ADVICE IS DON'T USE THE PERSONAL CREDIT FOR BUSINESS PURPOSES.IT DOESN'T HELP BUILD A BUSINESS CREDIT PROFILE, SOMETIMES YOU CAN EVEN HURT YOUR PERSONAL CREDIT SCORE EVEN IF YOU PAY THE CREDIT CARD BILL EVERY MONTH.BECAUSE PART OF HOW THEY CALCULATE YOUR PERSONAL CREDIT SCORE IS THE AMOUNT OF CREDIT YOU HAVE VERSUS THE AMOUNT OF CREDIT YOU UTILIZE.IF YOU'RE USING YOUR PERSONAL CREDIT FOR BUSINESS PURPOSES, THERE'S THE POTENTIAL TO USE A HIGHER AMOUNT OF YOUR CREDIT, THAT COULD NEGATIVELY IMPACT YOUR PERSONAL CREDIT SCORE.QUESTION NUMBER SIX WHAT IS YOUR INDUSTRY?THIS MIGHT SOUND LIKE A DUMB QUESTION.REALLY DIFFERENT INDUSTRIES HAVE A DIFFERENT RISK PROFILE.SO WHEN A BANK LOOKS AT A RESTAURANT COMPARED TO A MERCHANT OR AN AUTO MECHANIC, ALL OF THOSE BUSINESSES ARE IN DIFFERENT RISK CATEGORIES.AND THE CATEGORY THAT YOUR BUSINESS IS IN IS GOING TO IMPACT WHETHER OR NOT CERTAIN LENDERS ARE WILLING TO OFFER YOU A LOAN.FORTUNATELY THERE ARE SOME LENDERS THAT SPECIALIZE OR THAT DO A LOT TO OF BUSINESS IN SPECK INDUSTRIES.THE LOCAL BANK MIGHT NOT LIKE LENDING TO THE PRIVATELY OWNED RESTAURANT, BUT OTHER LENDERS DO.SO YOU'LL WANT TO KNOW YOUR INDUSTRY AND THE BANK IS GOING TO WANT TO?-- IS GOING TO ASK YOU ABOUT IT.AND THE REASON I BRING UP THIS QUESTION IS BECAUSE THIS IS SOMETHING THAT IS REFLECTED IN YOUR CREDIT PROFILE.IT'S SOMETHING THAT IS PULLED FROM THE PUBLIC RECORDS.SO WHAT YOU WANT TO DO WHEN YOU'RE CHECKING YOUR BUSINESS CREDIT PROFILE IS MAKING SURE INFORMATION LIKE THIS IS ACCURATE.DON'T JUST ASSUME THAT EVERYTHING IS CORRECT.MAKE SURE THAT YOU'RE IN THE RIGHT INDUSTRY CATEGORY SO THAT IT DOESN'T PUT YOU IN A HIGHER RISK PROFILE BUSINESS THAN WHAT YOU REALLY ARE.QUESTION NUMBER SEVEN WHAT IS YOUR ANNUAL REVENUE?THIS IS IMPORTANT BECAUSE QUESTION NUMBER ONE, CAN YOU REPAY A LOAN?LENDERS WANT TO SEE THAT YOU HAVE THE ABILITY TO MAKE PERIODIC LOAN PAYMENTS.AND DIFFERENT LENDERS HAVE DIFFERENT REQUIREMENTS.THE LOCAL BANK, DEPENDING UPON YOUR BANK MAY WANT TO SEE HALF A MILLION OR A MILLION DOLLARS IN ANNUAL REVENUES.AN ONLINE LENDER LIKE ONDECK WILL WANT TO SEE AT LEAST $100,000 IN REVENUE.BUT THEY WANT TO SEE REVENUE.I ONCE SPOKE WITH A BUSINESS OWNER, HE WAS JUST GETTING STARTED.HE READ AN ARTICLE I HAD WRITTEN AND HE REACHED OUT TO ME SAYING NO ONE WILL GIVE ME A LOAN.I WENT THROUGH THE QUESTIONS WITH HIM.I SAID WHAT IS THE LOAN PURPOSE?HE TOLD ME.I SAID HOW MUCH ARE YOU LOOKING FOR?HE TOLD ME.I SAID HOW MANY YEARS HAVE YOU BEEN IN BUSINESS?HE SAID I'M STILL JUST IN THE IDEA STAGE.I HAVEN'T REALLY STARTED BUSINESS YET.OKAY.I SAID DO YOU HAVE ANY REVENUE AT ALL?NOPE.SO I HAD TO TELL HIM WITHOUT REVENUE, WITHOUT A TRACK RECORD, IT'S VERY UNLIKELY THAT YOU'RE GOING TO BE ABLE TO QUALIFY FOR A LOAN.SOMETIMES THE SBA HAS START-UP PRODUCTS THAT THEY OFFER.IF YOU PERSONALLY HAVE AN ABILITY TO MAKE THE PAYMENTS.BUT AS A GENERAL RULE THE ODDS OF SUCCESS, GETTING A SMALL BUSINESS LOAN ARE VERY THIN.QUESTION NUMBER EIGHT, HAVE YOU EVER FILED FOR PERSONAL BANKRUPTCY.THIS FORTUNATELY DOESN'T AFFECT A LOT OF PEOPLE.IF YOU FILE FOR BANKRUPTCY IT'S A BIG DEAL FOR LENDERS.THE BEST-CASE SCENARIO IS PROBABLY THAT YOU WILL BE ABLE TO APPLY FOR A LOAN AND POSSIBLY GET QUALIFIED IF TWO YEARS HAS TRANSPIRED SINCE THE BANKRUPTCY TOOK PLACE.SOME LENDERS WILL TAKE LONGER THAN THAT.YOU KNOW, BASICALLY EXPECT THAT FROM THE MOMENT OF THE BANKRUPTCY YOU'RE STARTING ALL OVER AS FAR AS YOUR BUSINESS IS CONCERNED.YOU MAY BE IN BUSINESS FOR TEN YEARS, WHEN THEY EVALUATE YOUR CREDIT WORTHINESS, THEY'RE LOOKING AT YOU AS A BRAND-NEW BUSINESS.YOU HAVE TO REBUILD THAT TRACK RECORD.YOU HAVE TO REBUILD THAT CREDIT PROFILE.TAKE THE SAME APPROACH AS YOU WOULD HAVE AS IF YOU WERE A STARTUP.START WORKING WITH VENDORS.GET A BUSINESS CREDIT CARD.START THAT WAY.START TO REBUILD YOUR PERSONAL CREDIT SCORE AND YOUR BUSINESS CREDIT PROFILE.THIS IS SOMETHING THAT CAN BE A STOPPER FOR JUST ABOUT ANY LENDER.JUST BE AWARE.A BANKRUPTCY IS A QUESTION THEY'LL ASK.IF THEY DO, YOU NEED TO BE ABLE TO EXPLAIN HOW IT WAS DISPOSED OF AND WHAT HAPPENED AND OTHER RELATED QUESTIONS.ANOTHER SIMILAR QUESTION IS DOES YOUR BUSINESS HAVE ANY LIENS OR JUDGMENTS?BY THIS I MEAN, FOR EXAMPLE, IF YOU'RE A CONTRACTOR AND YOU'RE NOT PAYING YOUR SUBCONTRACTORS, YOU HAVE LIENS ON YOUR PROJECTS, YOU KNOW, MECHANICS LIENS WILL SHOW UP AGAINST YOU.ALSO YOU JUST NEED TO BE AWARE?THAT IF YOU HAVE ANY OTHER LOANS, WHEN THOSE LENDERS TYPICALLY WILL FILE A UCC FILING THAT SHOWS YOU HAVE OTHER DEBT.SO YOU NEED TO BE AWARE THAT IF YOU HAVE A SMALL BUSINESS LOAN FOR $10,000 AND YOU'RE TRYING TO BORROW ANOTHER $20,000, THAT YOU NEED TO BE ABLE TO DEMONSTRATE THAT YOU CANNOT ONLY PAY THE NEW LOAN AND THE OLD LOAN TOGETHER, NOT JUST THE NEW LOAN OR IF YOU'RE GOING TO ROLL THE OLD LOAN INTO THE NEW LOAN, THE LENDER IS GOING TO KNOW THAT.THAT UCC LIEN HAS BEEN FILED.DOES YOUR BUSINESS HAVE ANY LIENS OR JUDGMENTS?THAT'S A QUESTION THAT EVERY LENDER IS PROBABLY GOING TO ASK YOU.QUESTION NUMBER TEN.DOES YOUR BUSINESS HAVE ANY COLLATERAL?IN TRADITIONAL LENDING LIKE A BANK OR A CREDIT UNION OR THE SBA, COLLATERAL IS HOW THE LENDER IS GOING TO SECURE THE LOAN.IF YOU DON'T MAKE ALL OF THE PAYMENTS, YOU DEFAULT ON THE LOAN, THEY'RE GOING TO TAKE THE COLLATERAL.IF YOU'RE BUYING EQUIPMENT, TYPICALLY THE EQUIPMENT THAT YOU BUY WILL ACT AS COLLATERAL.IF YOU'RE GETTING AN SBA LOAN, THE SBA DOESN'T REQUIRE YOU TO COLLATERALIZE THE ENTIRE LOAN, OFTENTIMES, BUT THEY WILL TAKE ALL THE COLLATERAL THAT YOU HAVE.THAT MEANS IF YOU PUT UP REAL ESTATE OR PERSONAL PROPERTY OR SOMETHING LIKE THAT FOR COLLATERAL ON AN SBA LOAN OR A BANK LOAN AND YOU DEFAULT, THEY WILL COME AFTER IT.THAT'S HOW THEY MITIGATE THE RISK THAT THEY HAVE IN THE LOAN.THAT'S WHY THAT QUESTION IS ASKED.IF YOU DON'T HAVE COLLATERAL, YOU PROBABLY WON'T BE ABLE TO GO INTO THE BANK AND GET A LOAN.THAT DOESN'T MEAN THAT THERE ARE NOT INCREDIBLY HEALTHY PROFITABLE BUSINESSES THAT ARE GREAT LOAN CUSTOMERS THAT DON'T HAVE COLLATERAL IN FACT THERE ARE.AND LENDERS LIKE ONDECK, WE DON'T REQUIRE SPECIFIC COLLATERAL TO SECURE A LOAN.BUT WE WILL REQUIRE A LIEN ON BUSINESS ASSETS UNTIL THE LOAN IS PAID.AND WE WILL REQUIRE A PERSONAL GUARANTEE, JUST LIKE THE BANK, JUST LIKE ABOUT EVERY OTHER LENDER.SO A PERSONAL GUARANTEE AND A LIEN ON BUSINESS ASSETS IS ONE WAY THAT LENDERS SECURE THE FINANCING OR COLLATERAL IS ANOTHER WAY.IF YOU DON'T HAVE COLLATERAL, YOU'RE PROBABLY NOT GOING TO FIND SUCCESS AT A BANK OR SBA OR MORE TRADITIONAL TYPE LISTENING SITUATION.THAT'S WHY WE ASK ABOUT COLLATERAL.NOW, IF YOU CAN LOOK AT YOUR BUSINESS IN THE SAME WAY THAT A POTENTIAL LENDER DOES, IT'S GOING TO HELP YOU EVALUATE WHERE YOU MIGHT FIND THE MOST SUCCESS, AND IT WILL HELP YOU FILL IN THE BLANKS IN YOUR APPLICATION.IF YOU HAVE A LESS THAN PERFECT PERSONAL CREDIT SCORE AND YOU'RE ON TOP OF THAT, YOU CAN SPEND THE NEXT SIX, EIGHT, TEN MONTHS WORKING TO REPAIR YOUR CREDIT SCORE AND BE IN A BETTER POSITION TO GO IN AND ASK FOR A LOAN.IF YOUR BUSINESS PROFILE IS WEAK, YOU CAN START DOING THINGS TO IMPROVE YOUR BUSINESS PROFILE.FORTUNATELY IT DOESN'T TAKE FOREVER TO FIX A BAD CREDIT SCORE OR REPAIR A WEAK BUSINESS PROFILE, BUT IT DOES TAKE SOME TIME.I WOULD GIVE YOU SOME ADVICE HERE.THERE ARE PEOPLE WHO CLAIM TO BE ABLE TO DO THIS FOR A FEE.AND BASICALLY THERE IS NO SHORTCUT.THIS IS A SLOW AND STEADY WINS THE RACE SORT OF THING.YOU CAN START BY MAKING SURE EVERYTHING IN YOUR PROFILE IS ACCURATE.THE GOOD NEWS IS WITH YOUR BUSINESS CREDIT PROFILE, BASICALLY IT'S A COMPARISON OF THE NEGATIVE POINTS ON YOUR CREDIT REPORT AND THE POSITIVE THINGS.AND IF YOU HAVE MORE POSITIVE THINGS THAN NEGATIVE THINGS, THEY TEND TO PUSH THOSE NEGATIVE THINGS DOWN THE REPORT, ULTIMATELY YOU'LL HAVE MORE SUCCESS APPLYING FOR A LOAN.IF YOU LOOK AT YOUR REVENUE, SET SOME REVENUE TARGETS, MAKE SURE YOU HAVE THE REVENUE THAT IS GOING TO BE REQUIRED TO GO IN TO ONE OF THE LENDERS THAT YOU'RE SEEKING.BE AWARE, THOUGH, THAT THERE IS A COST ASSOCIATED WITH HAVING TO ACCESS FUNDS.THE SBA PROBABLY OFFERS THE LOWEST INTEREST LOANS, THE BANK OFFERS LOW INTEREST LOANS, HOWEVER THEY WANT TO SEE THE MOST CREDIT WORTHY BUSINESS THAT THEY CAN POSSIBLY FIND.IT'S HARDER TO GET THAT TYPE OF FINANCING.THERE ARE OTHER FINANCIAL VEHICLES LIKE A MERCHANT CASH ADVANCE, IF YOU HAVE 4,000, $5,000 IN MONTHLY CREDIT CARD TRANSACTIONS THEY WILL GIVE YOU AN ADVANCE ON YOUR BUSINESS CREDIT CARD ACCOUNT.HOWEVER THAT IS GOING TO BE EXPENSIVE FINANCING.MAKE SURE YOU KNOW WHAT YOU'RE GOING TO DO WITH IT AND TAKE CARE OF THAT, BE CAREFUL WITH HOW MUCH YOU BORROW IN THAT WAY.IT'S EXPENSIVE.THE BIG QUESTIONS THAT YOU NEED TO ASK ARE CAN I REPAY A LOAN?DO I PHYSICALLY?-- DOES MY BUSINESS HAVE THE ABILITY TO MAKE PERIODIC PAYMENTS?NUMBER TWO, CAN I DEMONSTRATE THAT I WILL REPAY A LOAN?DO I HAVE A CREDIT PROFILE THAT DEMONSTRATES THAT I AM RELIABLE LOAN CANDIDATE.NUMBER THREE, DO I HAVE A PLAN IN PLACE SO THAT SHOULD SOMETHING HAPPEN IN MY BUSINESS I CAN STILL PAY MY LOAN BACK PROPERLY.IF YOU ARE ANSWER THOSE QUESTIONS AND HAVE A HANDLE ON THE TEN QUESTIONS WE JUST WENT THROUGH, IT MIGHT NOT GUARANTEE THAT YOU WILL QUALIFY FOR A LOAN BUT IT WILL IMPROVE THE ODDS AND WILL PUT YOUR APPLICATION ON TOP OF THE PILE WHEN THE LOAN OFFICER IS REVIEWING YOUR BUSINESS AND CREDIT WORTHINESS.I HOPE THAT WAS VALUABLE INFORMATION.I APPRECIATE BEING HERE.SO LET'S DIVE IN TO SOME QUESTIONS.>> ALL RIGHT.WE WILL NOW GO AHEAD AND START THE Q & A PORTION OF OUR CALL.I'LL BE READING THE CHAT QUESTIONS THAT HAVE BEEN COMING IN, AND THEY ARE CONTINUING TO COME IN.IN THIS TIME REMAINING WE WILL ADDRESS JUST AS MANY AS WE POSSIBLY CAN.SO, WITH THAT LET'S JUMP INTO THESE QUESTIONS.TY, OUR FIRST QUESTION, THIS COMES TO US FROM CAROLINE.CAN YOU TALK ABOUT SOME SOURCES THAT A LENDER IS USING TO OBTAIN A CREDIT HISTORY BESIDES THE PERSONAL CREDIT REPORT?>> THIS IS A REALLY GOOD QUESTION.YOUR PERSONAL CREDIT SCORE IS REPORTED BY THE PERSONAL CREDIT BUREAU.EXPERIAN, EQUIFAX, THERE ARE ALSO BUSINESS CREDIT RECORDING BUREAUS.MOST LENDERS WILL LOOK AT WHAT THOSE CREDIT REPORTING BUREAUS REPORT ABOUT YOUR BUSINESS AND THEY WILL LOOK AT YOUR BUSINESS CREDIT PROFILE, AND I PURPOSELY CALL IT A PROFILE INSTEAD OF A SCORE BECAUSE YOUR BUSINESS CREDIT PROFILE IS ACTUALLY A COLLECTION OF SCORES.YOU MAY HAVE HEARD OF DUNHAM BRADSTREET, BUT THAT'S ONLY ONE THING THEY REPORT ON.THAT'S NOT THE ONLY BUREAU THERE ARE OTHERS.SO THEY GO TO BUSINESS REPORTING BUREAUS.>> ALL RIGHT.NEXT QUESTION, THIS COMES NYEEN, HOW SOON CAN A STARTUP ACCESS SBA-GUARANTEED LOANS?>> I'M NOT AN SBA LENDER, BUT I'LL TRY TO GIVE YOU THE MOST ACCURATE INFORMATION I'M AWARE OF.THE SBA DOES OFFER STARTUP LOANS, HOWEVER THEY WILL WANT TO SEE THAT YOU HAVE?-- WHAT WAS THE FIRST QUESTION?ABILITY TO MAKE A PERIODIC PAYMENT.SO THEY'RE GOING TO BE FACTORING IN YOUR PERSONAL INCOME, THEY'RE GOING TO WANT TO SEE THAT YOU HAVE THE INCOME TO MAKE A PAYMENT.THE SBA DOESN'T REQUIRE THAT YOU 100% COLLATERALIZE A LOAN, BUT THEY WILL TYPICALLY WANT ALL THE COLLATERAL YOU HAVE.SO ANY PERSONAL PROPERTY AND THINGS LIKE THAT.EXACTLY WHAT TIME FRAME THE SBA REQUIRES, I'LL BE HONEST, I'M NOT SURE.THEY ARE ONE OF THE FEW PLACES WHERE YOU CAN GET A STARTUP LOAN PROVIDED YOU CAN DEMONSTRATE AN ABLE TO MAKE A PAYMENT.>> OUR NEXT QUESTION, DAVINA SAYS SHE IS HAVING TROUBLE SECURING FUNDING FOR HER VENDING MACHINE STARTUP.CAN YOU GIVE SOME HELPFUL ADVICE?>> YES.STARTUPS?-- AND THERE WERE LOTS OF QUESTIONS LIKE THIS REGARDING STARTUPS.STARTUPS ARE PROBABLY THE MOST DIFFICULT WAY?-- DIFFICULT TIME FOR A BUSINESS TO GET FINANCING.MAINLY BECAUSE SHE DON'T HAVE A LOT OF REVENUE, AND THEY DON'T HAVE A TRACK RECORD.SO WHAT I THINK IS THE MOST IMPORTANT IS TO START FOCUSING ON BUILDING YOUR PROFILE.SEVERAL YEARS AGO I WAS ON A PANEL OF LENDERS AT AN AMAZON SELLER'S CONFERENCE.ONE GUY ASKED HOW MUCH SHOULD I BORROW AND HOW OFTEN SHOULD I BORROW?ONE OF THE OTHER PANELISTS SAID BORROW AS MUCH AS YOU CAN WHENEVER YOU CAN, BECAUSE YOU NEVER KNOW WHEN YOU'LL HAVE ANOTHER CHANCE.I TEND TO?-- I DISAGREED WITH THAT.THERE'S?-- REGARDLESS OF WHERE YOU GET FINANCING, THERE ARE COSTS ASSOCIATED WITH IT BORROWING WHEN YOU DON'T NEED TO BORROW, BORROWING TOO MUCH, THAT CAN HURT YOUR BUSINESS.THESE WERE ALL YOUNG BUSINESSES IN THE FIRST YEAR OR SO OF BUSINESS, MY ADVICE IS TO LOOK FOR WAYS OUTSIDE OF A BIZZEN LOAN TO BUILD YOUR BUSINESS CREDIT.THE BEST WAY IS TO ESTABLISH A TRADE RELATIONSHIP WITH YOUR SUPPLIERS.IT'S RELATIVELY EASY IF YOU'RE A GOOD CUSTOMER.THEY'RE MORE THAN WILLING TYPICALLY TO OFFER YOU 30-DAY TERMS OR MORE.THOUGH THAT'S NOT A LOAN, IT GIVES YOU OPPORTUNITY TO GET CREDIT.IF THEY REPORT YOUR HISTORY TO THE BUSINESS CREDIT BUREAUS, THAT WILL HELP YOU.IF THEY DENTED, YOU MAY BE BUILDING A GOOD CREDIT RELATIONSHIP WITH THAT SUPPLIER BUT IT WON'T HELP YOU GENERALLY.ANOTHER GREAT WAY FOR A SMALL BUSINESS THAT'S BRAND-NEW TO START ESTABLISHING BUSINESS CREDIT IS TO LOOK AT BUSINESS CREDIT CARDS.YOU PROBABLY PAY HIGHER INTEREST RATE ON THE CARD THAN YOU WOULD YOUR PERSONAL CARD, BUT IT'S RELATIVELY EASY FOR A YOUNG BUSINESS TO GET A BUSINESS CREDIT CARD AND IF YOU MAKE ALL THE PAYMENTS ON TIME, IT WILL BUILD YOUR CREDIT PROFILE.THAT'S PROBABLY THE BEST ADVICE.OTHERWISE REMEMBER WHAT I SAID.IT'S A GOOD IDEA TO AVOID USING YOUR PERSONAL CREDIT FOR BUSINESS PURPOSES BECAUSE IT COULD NEGATIVELY IMPACT YOUR PERSONAL CREDIT SCORE AND IT DOESN'T HELP YOUR BUSINESS CREDIT PROFILE.NEXT QUESTION IS FROM JILLIAN.IF I FILE FOR PERSONAL BANKRUPTCY OVER 15 YEARS AGO, WILL THAT NEGATIVELY AFFECT MY ABILITY TO GET BUSINESS FINANCING?>> THAT'S A GREAT QUESTION.BANKRUPTCY DOES SHOW UP FOR I THINK SEVEN YEARS ON YOUR CREDIT REPORT.THE QUESTION I WOULD ASK JILLIAN IS HOW IS YOUR CREDIT SINCE THE BANKRUPTCY?BASICALLY THE BANKRUPTCY IS STARTING ALL OVER AGAIN.IF THE BANK WANTS TO SEE FOUR, FIVE YEARS OF A POSITIVE TRACK RECORD, YOU STARTED OVER AGAIN WITH THE BANKRUPTCY.IF YOU'RE GOING WITH AN ONLINE LENDER THAT ONLY REQUIRES A YEAR OF GOOD CREDIT HISTORY, THEN HOW IS THAT FIRST YEAR AFTER BANKRUPTCY?I TAKE THAT BACK.USUALLY YOU WON'T BE ABLE TO GET A LOAN FOR TWO YEARS.BUT WHAT THEY'LL BE LOOKING AT IS HOW HAVE YOU DEALT WITH YOUR CREDIT PERSONALLY AND BUSINESS WISE SINCE THE BANKRUPTCY.IF YOU HAVE A GOOD CREDIT HISTORY SINCE THEN, A STRONG CREDIT PROFILE YOU SHOULDN'T HAVE ANY PROBLEM GETTING A LOAN.>> OUR NEXT QUESTION IS FROM KATHLEEN, WILL A CREDIT CHECK AFFECT HER CREDIT SCORE?>> OKAY.THERE'S TWO ANSWERS TO THIS QUESTION.IF YOU CHECK YOUR PERSONAL CREDIT INDIVIDUALLY, NO.YOU CAN CHECK YOUR PERSONAL CREDIT AS MUCH AS YOU WANT.FOR EXAMPLE, I HAVE A RELATIONSHIP WITH EXPERIAN WHERE EVERY MONTH I GET AN UPDATE ON MY CREDIT REPORT, AND THEY GIVE ME ANY?-- IF ANYTHING CHANGES, IF THERE'S A NEW CREDIT ACCOUNT OR I PAY ONE OFF, I'LL GET AN UPDATE.THAT DOES NOT IMPACT MY PERSONAL CREDIT SCORE AT ALL.IF I'M APPLYING FOR CREDIT, IF I GO INTO A DEPARTMENT STORE AND THEY OFFER ME A CREDIT CARD AND THEY CHECK MY CREDIT, THAT HAS THE POTENTIAL TO DING MY CREDIT.SO MY CREDIT SCORE WILL GO DOWN SOME.FORTUNATELY IF YOU'RE LOOKING FOR AN AUTO LOAN OR A MORTGAGE THEY RECOGNIZE THAT YOU'RE GOING TO BE SHOPPING, SO YOU WILL GET THE DING FOR THE FIRST ONE, BUT YOU WON'T SUBSEQUENTLY AFTER THAT.IF YOU'RE GETTING A BUSINESS LOAN, THEY'LL LOOK AT YOUR BUSINESS CREDIT PROFILE, DEPENDING ON WHETHER THEY DO?-- WHAT THEY CALL A HARD INQUIRY OR A SOFT INQUIRY, IT MAY OR MAY NOT IMPACT YOUR PERSONAL CREDIT SCORE.ONDECK DOES A SOFT CREDIT INQUIRY, SO IT DOES NOT IMPACT YOUR PERSONAL CREDIT.>> OKAY.NEXT QUESTION IS FROM CAROLINE.SHE ASKS IF YOU COULD REPEAT WHAT THE PUBLIC RECORDS WERE THAT YOU WERE REFERRING TO EARLIER, AND WHAT ARE THE SOURCES OF THAT DATA.>> OKAY.THIS IS A REALLY GOOD QUESTION.THERE ARE A COUPLE DIFFERENT SOURCES OF INFORMATION.WHEN YOU GO IN AND LICENSE YOUR BUSINESS WITH THE STATE WHERE YOU DO BUSINESS, YOU TYPICALLY TELL THEM THINGS LIKE THE TYPE OF INDUSTRY YOU'RE IN, THE TYPE OF BUSINESS THAT YOU'RE GOING TO DO, AND ALL THOSE KINDS OF THINGS.BASICALLY WHAT HAPPENS IS THE STATE OR THE COUNTY WHERE YOU'RE AT, THEY KIND OF KEEP A RECORD OF HOW MANY EMPLOYEES YOU HAVE, WHAT YOUR ANNUAL REVENUES ARE, THEY PULL THIS OUT OF THE TAX DATABASE, AND THERE'S LOTS OF PLACES THAT THEY GET THE INFORMATION.SO THE PUBLIC RECORD, INFORMATION THAT IS AVAILABLE TO ANYONE WHO CAN GO IN TO THE OFFICES AND PULL UP INFORMATION ABOUT YOUR BUSINESS.THIS IS REALLY IMPORTANT.IF YOUR BUSINESS IS CATEGORIZED INCORRECTLY, IT CAN PUT YOUR BUSINESS IN A HIGHER RISK PROFILE THAN ANOTHER BUSINESS.YOU WANT TO MAKE SURE THAT INFORMATION IS AS ACCURATE AS POSSIBLE.FORTUNATELY FOR YOU THE CREDIT BUREAUS ARE MOTIVATED TO MAKE SURE THE INFORMATION THEY HAVE ABOUT YOUR BUSINESS IS ACCURATE SO THEY ALL HAVE PROCEDURES IN PLACE SO THAT IF YOU SEE SOMETHING IN YOUR CREDIT PROFILE THAT IS INACCURATE, YOU CAN VALIDATE IT AND IF YOU CAN DEMONSTRATE THAT?-- IF YOU HAVE VALIDATION THAT WHAT THEY HAVE ABOUT YOU IS INCORRECT, THEY WILL FIX IT.I'M A BIG BELIEVER IN REGULARLY MONITORING YOUR BUSINESS CREDIT PROFILE AS WELL AS YOUR PERSONAL CREDIT PROFILE, YOU WANT TO MAKE SURE IT'S ACCURATE.IF YOU GO TO EXPERIAN OR DUNN AND BRADSTREET, YOU CAN CREATE A RELATIONSHIP WITH THEM SO YOU CAN KEEP TRACK OF YOUR BUSINESS CREDIT PROFILE.ONE OTHER SPONSOR HERE AT THE SCORE CONFERENCE IS NAV, THEY OFFER A SERVICE THROUGH THEIR CUSTOMERS.I HAVE NO IDEA WHAT THEY CHARGE, BUT IT'S JUST A GOOD IDEA TO KEEP TRACK OF ALL OF THAT INFORMATION.IT'S NOT JUST ABOUT YOUR CREDIT HISTORY.IT'S MAKING SURE THAT, FOR EXAMPLE, DUN & BRADSTREET WILL LOOK AT, WHEN THEY CONSIDER YOUR BUSINESS FOR CREDIT, THEY'RE LOOKING AT THE SIZE OF YOUR BUSINESS, HOW MUCH REVENUE YOU HAVE, HOW MANY EMPLOYEES YOU HAVE, AND THEY'RE COMPARING YOUR BUSINESS TO OTHER BUSINESSES IN THE SAME INDUSTRY, THEY'RE COMPARING YOUR BUSINESS TO OTHER BUSINESSES OF THE SAME SIZE, WITH THE SAME EMPLOYEES, AND SO YOU WANT AS ACCURATE OF A PORTRAYAL OF YOUR BUSINESS AS POSSIBLE IN THE BUSINESS CREDIT BUREAUS.A LOT OF THE INFORMATION THEY GET ABOUT YOUR BUSINESS GENERALLY IS TAKEN FROM THE PUBLIC RECORD, WHICH IS INFORMATION THAT THE STATE OR THE COUNTY WHERE YOU DO BUSINESS HAS ON YOU.>> TY, NEXT QUESTION?-- SORRY, WERE YOU FINISHED?>> YEAH.I WAS GOING TO SAY THAT'S A LONG ANSWER, SO I'M SORRY.I HOPE THAT ANSWERED THE QUESTION.>> OKAY.OUR NEXT QUESTION COMES FROM RHONDA, WOULD YOU ADVISE APPLYING FOR A BUSINESS LOAN OR A BUSINESS LINE OF CREDIT?>> THIS IS WHY MY FIRST QUESTION IS WHAT IS YOUR LOAN PURPOSE?WHY DO YOU NEED THE MONEY?THAT'S GOING TO HELP YOU DETERMINE WHAT TYPE OF LOAN OR LINE OF CREDIT OR WHATEVER MAKES THE MOST SENSE.FOR EXAMPLE, IF I'M BUYING A NEW AUTOMOBILE, A THREE-YEAR AUTO MORTGAGE IS PROBABLY NOT THE OPTION FOR ME.THAT'S GOING TO BE WAY TOO EXPENSIVE WHEN I START ADDING UP THE TOTAL INTEREST.WHY ARE YOU BORROWING?IS IT A SHORT-TERM NEED LIKE PURCHASING INVENTORY?IS IT A LONG-TERM NEED LIKE MAYBE EXPANDING INTO ANOTHER LOCATION?IS IT AN INTERMITTENT NEED WHERE YOU OCCASIONALLY NEED $1,000, $5,000, THAT WILL HELP YOU DETERMINE WHETHER OR NOT A TERM LOAN OR A LINE OF CREDIT IS GOING TO MAKE THE MOST SENSE.IF YOU HAVE AN INTERMITTENT NEED THAT OCCASIONALLY COMES UP AND YOU NEED CAPITAL FOR A MONTH OR TWO AND THEN YOU CAN PAY IT OFF, MAYBE A LINE OF CREDIT IS A GOOD OPTION.IF YOU CAN BUY QUICK TURNAROUND INVENTORY THAT YOU CAN PURCHASE AT A DISCOUNT AND SELL IT IN THREE MONTHS, MAYBE A SHORT-TERM LOAN IS THE BEST OPTION.YOU COULD ALSO USE A LINE OF CREDIT FOR THAT, TOO.THAT'S WHY THAT FIRST QUESTION IS SO IMPORTANT WHAT ARE YOU BORROWING FOR WHAT IS YOUR LOAN PURPOSE.THAT WILL HELP YOU DETERMINE WHAT KIND OF FINANCING MAKES THE MOST SENSE.>> OUR NEXT QUESTION IS KAREN.THIS IS A SITUATIONAL QUESTION.KAREN SAYS THAT THEY ARE A VOLUNTEER-BASED 501 C3 NON-PROFIT LOOKING TO HIRE STAFF.THEY HAVE OVER 100,000 A YEAR IN BUDGET THIS IS NOT INCLUDING VALUE OF IN-KIND DONATION OF STAFFING, THEY'VE BEEN IN BUSINESS FOR SEVEN YEARS, THEIR REVENUE FOR PROGRAMS COMES FROM DONATIONS, BUT THEY DON'T HAVE ENOUGH CURRENTLY TO HIRE STAFF.WAS KIND OF BUSINESS LOANS COULD THEY RECEIVE?>> THIS IS ANOTHER EXAMPLE OF WHY QUESTION NUMBER ONE IS IMPORTANT.BECAUSE QUESTION NUMBER ONE, WHAT ARE YOU BORROWING FOR IS ALSO GOING TO POINT, YOU AT WHERE TO LOOK.SOME LENDERS WILL LEND TO NON-PROFITS, OTHERS WILL NOT.ONDECK, WE TYPICALLY DON'T LEND TO NON-PROFITS.BUT THERE ARE LENDERS THAT DO.AS YOU'RE SEARCHING FOR A LENDER YOU WANT TO BE ASKING THAT QUESTION.DO YOU WORK WITH NON-PROFITS?THIS IS OUR BUSINESS SITUATION.THIS IS HOW WE'RE DOING NOW.ON A SIDE NOTE, THIS IS A UNIVERSAL QUESTION HERE, SOMETIMES BORROWING TO RAMP UP STAFF, IT CAN BE A GOOD LOAN PURPOSE.I'M FAMILIAR WITH A COMPANY THAT'S DOING CONSULTING WORK FOR THE FEDERAL GOVERNMENT.THEY GOT A BIG CONTRACT AND THEY NEEDED TO RAMP UP TO SERVICE THE CONTRACT WHICH MEANS THEY NEEDED TO BUY EQUIPMENT, HIRE PEOPLE.BUT THE FEDERAL GOVERNMENT TYPICALLY DOES NOT PAY ON 30-DAY TERMS.SO THEY NEEDED SOMETHING TO BRIDGE THE GAP BETWEEN STARTING THE CONTRACT AND?-- BRIDGE THE GAP BETWEEN GETTING STARTED AND GETTING PAID BY THE GOVERNMENT.SO YOUR LOAN PURPOSE IS A GOOD PURPOSE.RAMPING UP, HIRING STAFF CAN BE A GOOD, LEGITIMATE REASON TO BORROW.YOUR CHALLENGE IS FINDING THE LENDER THAT WORKS WITH NON-PROFITS.MAYBE AN ONLINE SEARCH, SEE IF YOU CAN FIND SOMEONE WHO WILL WORK WITH A NON-PROFIT.>> NEXT QUESTION.LEE ASKS HOW YOU MAKE AN INFORMED DECISION ABOUT WHERE TO SOURCE CAPITAL FROM, SUCH AS REFINANCING A HOMERS HAVES RETIREMENT LOANS, VERSUS SMALL BUSINESS LOANS.>> THIS IS A COMPLICATED QUESTION.A LOT OF SMALL BUSINESSES, THEY START?-- THEY CAPITALIZE THEIR BUSINESS WITH A MORTGAGE, OR THEY BORROW FROM THEIR 401(k), SOMETHING LIKE THAT.I'VE GOT TO BE HONEST, I'VE DONE BOTH OF THOSE THINGS.HOWEVER IT CAN BE DETRIMENTAL TO YOUR PERSONAL CREDIT.IF I WAS TO DO IT OVER AGAIN, I WOULD BE MUCH MORE CONSERVATIVE THAN I WAS.I PROBABLY WOULDN'T ACCESS MY PERSONAL CREDIT TO FINANCE THE BUSINESS.WE LIVE IN A WORLD WHERE THE MEDIA HAS US BELIEVING THE ANSWER TO OUR SMALL BUSINESS PROBLEMS IS MONEY.I DISAGREE WITH THAT.I THINK THE ANSWER IS CREATIVE PROBLEM SOLVING.I SPOKE TO A BUSINESS OWNER NOT LONG AGO WHO STARTED HIS DIZZINESS WORKING OUT OF THE UTILITY CLOSET IN AN OFFICE BUILDING THAT HIS FATHER OWNED.HE DIDN'T HAVE ANY RENT.IT WAS A REAL GHETTO PLACE TO START BUSINESS, AND HE BOOTSTRAPPED EVERYTHING.TODAY HE'S AN $11 MILLION A YEAR COMPANY.THEY LOOKED FOR WAYS TO GET AROUND THE NEED FOR MONEY.AND THEY BARTERED SERVICES.THEY DID ALL SORTS OF THINGS LIKE THAT TO AVOID THE NEED TO GO OUT AND BORROW A LOT OF MONEY FROM THEIR HOME EQUITY OR FROM THEIR 401(k).IF YOU'RE GOING TO DO THAT BE CAREFUL.THERE'S PENALTIES FOR TAKING MONEY OUT OF YOUR 401(k) EARLY.IF YOU BORROW LIKE THAT, YOU'RE BORROWING FROM YOUR FUTURE, YOU JUST WANT TO BE CAREFUL AND I WOULD NOT RECOMMEND THAT UNLESS IT WAS A LAST-RESORT TYPE OF SITUATION.THE BIGGEST SOURCE OF CAPITAL RIGHT NOW IS THE LAST PLACE PEOPLE WANT TO GO, FRIENDS AND FAMILY.I THINK I WOULD LOOK AT FRIENDS AND FAMILY BEFORE I WENT TO THOSE TYPES OF THINGS.THE WAY TO MAKE THAT WORK IS TREAT IT LIKE A LOAN.MAKE THE LOAN CONTRACT, MAKE PAYMENTS TO YOUR UNCLE FRED, THE COLLEGE ROOMMATE WHO WAS GIVING YOU SOME MONEY SO THEY FEEL LIKE THEY HAVE?-- THAT YOU'RE TAKING THEIR INVESTMENT SERIOUSLY REGARDLESS OF WHETHER OR NOT THEY SAY DON'T WORRY ABOUT IT UNTIL YOU'RE PROFITABLE.I WOULD MAKE SURE AND KEEP TRACK OF EVERY PENNY AND MAKE THE PAYMENTS AS YOU AGREE TO.>> OKAY.TY, OUR NEXT QUESTION COMES FROM VAREENA.SHE SAID SHE RECEIVED A PRE-APPROVED LETTER FOR A BUSINESS LOAN FROM HER BANK THAT SHE HAD HAD HER BUSINESS ACCOUNT WITH FOR MORE THAN TWO YEARS.HER PERSONAL CREDIT SCORE IS 740, SHE GOT DENIED.SO SHE'S ASKING CAN THAT HAPPEN EVEN AFTER RECEIVING THE PRE-APPROVED LETTER?THEY KNOW HER ACCOUNT ACTIVITY SINCE HER BUSINESS ACCOUNT HAS BEEN WITH THEM.>> THIS IS KIND OF INSIDE BASEBALL HERE.OFTENTIMES WHEN YOU GET A SOLICITATION IN THE MAIL THAT SAYS YOU'RE PRE-APPROVED, WHAT THAT REALLY MEANS IS THAT THEY KNOW ENOUGH ABOUT YOU TO SEND YOU THE LETTER.IT DOSENT'S MEAN YOU HAVE BEEN APPROVED FOR THE LOAN.EVEN THOUGH YOU HAVE A WONDERFUL PERSONAL CREDIT SCORE THAT DOESN'T MEAN THERE'S NOT OTHER FACTORS IN YOUR BUSINESS THAT THROW UP A RED FLAG TO A POTENTIAL LENDER.FOR EXAMPLE, RESTAURANTS ARE CONSIDERED TO BE A LITTLE MORE RISKY THAN OTHER SMALL BUSINESSES.SO YOU COULD PERSONALLY HAVE A 740 CREDIT SCORE BUT YOU'RE A RESTAURANT, AND THE PARTICULAR BANK THAT YOU DO BUSINESS WITH DOESN'T GENERALLY LEND TO RESTAURANTS.SO THERE COULD BE A LOT OF OTHER FACTORS.THAT DOESN'T MEAN THERE ARE NOT PLACES YOU COULD GO TO FIND FINANCING.ONLINE LENDERS, LIKE AT ONDECK, WE WORK WITH A LOT OF RESTAURANTS.WE WORK WITH A LOT OF SMALL BUSINESSES.SOMETIMES EVEN IT COULD BE THAT YOU'RE NOT ASKING FOR TOO MUCH, YOU'RE ASKING FOR TOO LITTLE.IT COSTS THE BANK ABOUT THE SAME TO PROCESS A $50,000 LOAN AS IT DOES TO PROCESS A HALF MILLION DOLLAR LOAN AS FAR AS OVERHEAD EXPENSE IS CONCERNED.SOME BANKS, IF YOU DON'T NEAT THE MINIMUM, THEY'LL DECLINE YOUR LOAN APPLICATION JUST BECAUSE YOU DON'T NEED ENOUGH MONEY, AND THAT'S 40,000, $50,000 YOU'RE LOOKING FOR WHICH IS PROBABLY A SMALL FORTUNE TO YOU, BUT THAT'S NOT RELEVANT TO THE BANK.IF THE BANK DECLINED ME, I WOULD WANT TO KNOW WHY.I WOULD GO TO THE BANKER AND SAY WHY WAS MY LOAN APPLICATION DENIED?I WOULDN'T BE DEFENSIVE ABOUT IT.BUT I WOULD SAY I WANT TO MAKE SURE NEXT TIME I'M BETTER PREPARED.IF YOU HAVE A GOOD LOAN OFFICER, HE OR SHE WILL HOPEFULLY TELL YOU WHY YOUR LOAN WAS DECLINED.MAYBE IT'S YOUR ANNUAL REVENUES, MAYBE IT'S YOUR INDUSTRY.MAYBE IT'S ONE OF THE TEN OR SO THINGS WE TALKED ABOUT.WITH A 740 PERSONAL CREDIT SCORE, THAT DEFINITELY DOESN'T GUARANTEE YOU A LOAN, BUT IT DOES IMPROVE THE ODDS FOR YOU.DON'T GIVE UP.KEEP AFTER IT.>> TY, WE HAVE TIME FOR ONE OR TWO MORE QUESTIONS HERE.THE NEXT ONE COMES FROM RHONDA.SHE SAYS SHE'S BEEN IN BUSINESS A LITTLE OVER TWO YEARS.AT THIS POINT SHE'S RELIED ON HER PERSONAL CREDIT TO FUND HER BUSINESS.WHAT WOULD BE THE BEST WAY TO CHANGE THIS AND ESTABLISH A BUSINESS CREDIT RECORD?>> THIS IS VERY SIMILAR TO SOMETHING WE WERE TALKING ABOUT BEFORE.IT IS PROBABLY?-- IF YOU WALK AWAY FROM THIS WEBINAR WITH NOTHING ELSE, SEPARATING YOUR BUSINESS AND YOUR PERSONAL CREDIT IS ONE OF THE MOST IMPORTANT THINGS YOU CAN DO.IF YOU'RE IN AN INDUSTRY WHERE IT'S COMMON PRACTICE FOR TRADE SUPPLIERS TO OFFER YOU CREDIT, THAT'S A WONDERFUL PLACE TO START.IF NOT THERE ARE PLACES LIKE STAPLES, HOME DEPOTS, LOWE'S THAT OFFER A LOT OF SUPPLIES THAT BUSINESSES TYPICALLY USE, WHETHER IT'S OFFICE SUPPLIES, CLEANING SUPPLIES, WHATEVER, AND THEY OFFER CREDIT.SO YOU CAN GO IN AND APPLY FOR CREDIT THERE AND THEY'LL START REPORTING THAT CREDIT TO THE BUSINESS CREDIT BUREAUS.THAT'S A GREAT WAY TO GET STARTED.THE OTHER WAY IS TO?-- ANOTHER THING YOU CAN DO IS TO APPLY FOR A BUSINESS CREDIT CARD.GO TO AMEX, CAPITAL ONE, ONE OF THOSE GUYS AND APPLY FOR A BUSINESS CREDIT CARD.AND THEY WILL MAKE SURE THAT THAT PARTICULAR CREDIT CARD IS A BUSINESS CARD, AND THAT THAT PARTICULAR CREDIT CARD REPORTS TO THE BUSINESS CREDIT BUREAU, BECAUSE SOME OF THEM REPORT TO THE PERSONAL BUREAU.THAT'S NOT WHAT YOU WANT.BE AWARE THAT BUSINESS CREDIT CARDS DON'T NECESSARILY ACT THE SAME WAY PERSONAL CREDIT CARDS DO.YOU'RE GOING TO WANT TO MAKE SURE YOU UNDERSTAND WHAT THEIR TERMS ARE, AND YOU WILL WANTED TO MAKE SURE THAT YOU PAY THE MINIMUM BALANCE AT LEAST EVERY TIME BECAUSE SOMETIMES IF YOU DON'T THE DAY, AT MIDNIGHT THAT THAT PAYMENT IS DUE, IF YOU HAVEN'T MADE THE PAYMENT THERE WILL BE A BIG FEE ATTACHED YOU COULD BE PAYING MORE IN FEES THAN YOU PAY IN INTEREST.SO YOU WANT TO BE CAREFUL AND MANAGE THAT REALLY WELL, BUT THOSE ARE PROBABLY THE BEST TWO WAYS TO ESTABLISH CREDIT AND STOP USING YOUR PERSONAL CREDIT.IT'S REALLY TEMPTING.YOU KNOW, I'VE BEEN THERE.I UNDERSTAND.YOU WANT TO AVOID USING YOUR PERSONAL CREDIT AS MUCH AS YOU CAN. >> OKAY.THOSE ARE THE QUESTIONS WE HAVE TIME FOR IN THE SESSION TODAY.IF WE DO NOT HAVE A CHANCE TO ADDRESS YOUR QUESTION, I ENCOURAGE YOU TO CONNECT WITH A SCORE MENTOR.MENTORS ARE AVAILABLE TODAY IN THE MENTORING HALL.YOU CAN ALSO CONNECT WITH A MENTOR OUTSIDE OF THIS EVENT ONLINE OR IN A LOCAL CHAPTER NEAR YOU.ON BEHALF OF SCORE AND ONDECK I WOULD LIKE TO THANK YOU ALL FOR ATTENDING THIS WEBINAR.I WOULD LIKE TO GIVE A BIG THANK YOU TO TY KIISEL FOR PRESENTING WITH US TODAY.TY, THANK YOU VERY MUCH.>> YOU ARE VERY WELCOME.I WILL BE IN THE ONDECK BOOTH FOLLOWING THIS IF YOU HAVE ANY QUESTIONS.AND I CAN'T SAY ENOUGH ABOUT THE SCORE MENTORS.THESE ARE GUYS AND GALS WHO HAVE BEEN THERE, DONE THAT, AND THEIR ADVICE IS INCREDIBLY VALUABLE.TAKE ADVANTAGE OF THAT.>> ALL RIGHT.WE HOPE THAT YOU ENJOY THE REST OF THE VIRTUAL CONFERENCE.WE HOPE YOU WILL JOIN US BACK FOR ONE OF THE NEXT WEBINARS THAT IS TAKING PLACE IN 15 MINUTES.THE TOP EIGHT ISSUES BUSINESS OWNERS FACE AND HOW TO SOLVE THEM.AND MONETIZING AND MAXIMIZING YOUR BUSINESS AND YOUR BRAND.WE THANK YOU ALL SO MUCH AGAIN AND WE LOOK FORWARD TO SEEING YOU SOON. ................
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