How to Open a Business Account With Bad Credit

How to Open a Business Account With Bad Credit

Opening a business bank account with less than stellar credit is easier than it once was. Even if your bad credit includes being reported to ChexSystems for writing bad checks, the odds are still in your favor for opening a business account. The best actions are to be honest, do careful research and move forward.

Simple tips:

1. Incorporate your business. By registering your company, you will receive a tax identification number that can be used to open a business bank account. It removes business assets from your personal accounts and protects them from creditors. When opening a business account, all banks require a tax identification number to comply with federal regulations.

2. Contact banks who open business accounts for people with bad credit. Call and ask to speak with the bank manager. Explain your bad-credit situation and the circumstances surrounding it. Some examples of banks that open high-risk business accounts include Bank of America, SunTrust and Wells Fargo. Apply in person or online to receive an instant answer.

3. Visit your local credit union. Inquire about opening a business account. Credit unions are less likely to use check verification systems and credit reports. Thus, most are willing to work with bad-credit situations. Ask their requirements, fill out an application and wait for your status.

4. Open a savings account. Most banks let customers open savings accounts with less-than-perfect credit. It is possible to open a savings account that functions as a checking account. After establishing a positive account status, ask to open a checking account.

5. Shop around. Call different banks and ask about opening a business bank account. Visit the branch where your personal accounts are held. Ask to open an account based on your ability to maintain a certain balance. Pledge company assets as collateral. Speak to the bank manager and explain your situation.

How to Get a Large Business Loan

How to Get a Large Business Loan

With the economy struggling, it has become increasingly difficult to get a loan to finance a small or large business. Having poor credit increases an individual’s chances of being denied financing, particularly if he is applying for a large amount of money, and can make starting a new business challenging.

Simple tips for you:

1. Put together a business plan that is well organized and will catch the attention of the lending officer. If you’re unsure of where to start in putting together a good business plan, seek advice from the Small Business Administration website or by speaking with a representative from its local office. The SBA website offers tutorials and information about how to put together a good business plan, so read the information thoroughly and follow the SBA recommendations. Include a detailed description of the business, marketing ideas and plans, any finances that are currently available to you for the business, and a management plan. Include a cover sheet and a statement of purpose.

2. Consider some type of business insurance if you are serious about starting your own business. Get a quote for this insurance ahead of time so that it can be included in your business plan and to show that you are not only serious but have planned everything out. In the business plan, break down how you plan on making money from your business idea and show the lender how you will pay back the borrowed money. If you have any start-up money of your own, you’ll need to include this in the plan. Sometimes lenders want to see an entrepreneur put up 10 to 15 percent of the total amount needed so that they can see the borrower is serious. Many lenders will not make a loan to someone who can’t put forth the financial effort initially to start a business.

3. Complete a loan application in advance before going to see the loan officer. Provide copies of current cash flow as well as backup cash flow in case the business doesn’t do well at first. Before visiting the loan officer, figure out exactly how much money you will need to borrow. Plan on not making enough money to make a profit and pay your regular monthly bills for at least two to three years. Some experts say five years, but most people cannot borrow enough money to sustain lifestyle and business needs for five years. Create a backup plan for if you do not get the loan and be sure to have that available to show the loan officer. Once everything is prepared, set up an appointment to apply for the loan.

How to Start a Small Business With Bad Credit

How to Start a Small Business With Bad Credit

If you have bad credit, you know how hard it is to get things accomplished. You have a hard time getting a car loan, home loan, or even a cable account in some cases. But what about starting a business? Maybe you have a magnificent small business idea, but you don't have a clue as to how to get it off the ground due to your bad credit. The key is to lower your expectations to reasonable levels, use cash, lower expenses, and develop creative methods of advertising your business.

Tips for you:

1. First, you must choose a concept that requires a very low investment when you are starting a small business with bad credit. You may have to compromise on your ultimate dream for the time being. The best business to start when you have bad credit is a service business, because you are not required to make an initial investment in tangible products. Later on down the line, when you make enough money from your small business you can think bigger. So for example, maybe you have a dream of starting a computer business for selling CPUs and parts. Instead, start off giving computer advice and repair services to customers and grow from there.

2. Apply for a business license and small business name for your company with your state. While you probably won't have to pay a fee to apply for your license, you will most likely have to have cash available to register your business name and for other business services.

3. Since you have bad credit, it is unrealistic to consider getting a small business loan to finance your business from a regular bank. So instead of a small business loan, ask your friends and family to invest in your business. Discuss a reasonable return that your family members can expect from their investment and hold to your promises to your loved ones, regardless of what happens with your business.

4. Contact web-based lenders (such as Prosper.com) to see if someone is willing to give you a loan for your business even though you have bad credit. Keep in mind that these small lenders usually also look at credit rating above all other factors when making a decision about whether to contribute their money towards your goals. Sign up for an account at Go Big Network, to look for angel investors or solicit possible investors in your area by posting a short description of your business at Craigslist (don't be too detailed about your plan in this public forum; just let them know that you'd be happy to send a short proposal to interested parties). If your idea is profound, an angel investor may give you a shot even if your credit is less than perfect.

5. Publish press releases to promote your business; at least once a month. This is the cheapest and most effective way to advertise your small business to the masses with a limited budget. You will reach Companies like PRWeb (see resources for link) allow you to submit a press release to thousands for as little as $40.

6. Produce your own business cards. You can do this by purchasing business card paper from your local supply store, using the business card templates in Microsoft Word (you may need an internet connection for access), and printing the sheets on your InkJet printer. Have a reasonably priced graphic designer ($20-$30 per hour) produce a two-sided, color, 4x6 flyer advertising your business and have it printed on high quality paper that can't be torn. Hit the streets with your business cards and flyers to talk up your business and give people something to take home.

7. Ask friends or family to rent business equipment on your behalf (you pay the bill, of course), but only if the equipment is absolutely necessary. Your credit may be bad on paper, but hopefully your word is still good with your loved ones.

How to Buy an Existing Business With Bad Credit

How to Buy an Existing Business With Bad Credit

There are very few avenues to wealth in America besides owning your own business. There are two ways to own a business. You can start one from scratch or buy an existing one. To buy an existing business, you need capital. It is difficult to obtain capital to buy a business if you have bad credit, but it is not impossible.

Tips for you:

1. Create a good business plan. This is the first step in your quest for financing. Most lenders will ask to see a business plan. A good business plan tells everyone that you know the business you want to buy and that you are capable of running that business. It also highlights the profitability of that business in the past and its future growth potential.

2. Go to family and friends for funding. This is the easiest way to find the capital to buy a business, but it will not apply to everyone. If you have family and friends who can finance you, go to them. They know you and won’t ask to see your credit history if you can convince them that the business you want to buy has been and will continue to be profitable. Having a good business plan helps in this area.

3. Get a bad credit business loan. They are available from your local bank for borrowers with bad credit history. They have higher interest rate charges and other fees, but your lender will gladly renegotiate the terms if you make your monthly payments on time.

4. Use micro lenders. Micro loans are special loans designed for borrowers who are unable to get loans from banks, and the Small Business Administration (SBA) guarantees them. These banks charge higher interest and other fees, and the limit for these loans is $50,000. Micro loans may not be available to you if you are buying a business valued at more than $50,000.

5. Borrow on your home. By taking out a second mortgage on your house or borrowing against your equity line of credit, you avoid credit questions. Banks will finance your business purchase if you use your house as collateral.

6. Get financed directly by the state or federal government. Various state and federal government programs have money available to finance your business purchase if that business meets certain criteria. Different departments give free grants to start a new business or purchase an existing business without the need for repayment. If you are a veteran, live in certain parts of the country or are involved in certain areas of research, the United States government will back your business purchase with a grant. See Resources below for additional information.

How to Get a Small Business Loan

How to Get a Small Business Loan

Obtaining a small business loan can help entrepreneurs and start-up companies secure the financing necessary to get their businesses off the ground. Applying for a small business loan is similar to applying for a home loan. Financial institutions will want to verify proof of income and creditworthiness as well as review a detailed business plan that outlines how you intend to use and repay the borrowed funds.

Check Your Credit
Your personal credit and financial history will likely be used as a baseline for determining if you qualify for a small business loan, particularly if you are forming a sole proprietorship or partnership. Check your credit score prior to applying for a small business loan to ensure there are no discrepancies or irregularities that need to be addressed. If you have already launched your company and have any type of business credit in place, check your business credit history for errors as well.

Write a Business Plan
Most small business lending institutions will require a detailed business plan prior to considering a loan application. Your business plan will outline your short- and long-term business goals and objectives and provide research on earning potential. The plan should also detail how much money you need, how it will be used and when you can expect a return on your investment. The bank will also want to examine your market research, which will help you demonstrate the viability of the operation you are looking to fund. You can write a basic business plan following guidelines outlined by U.S. Small Business Development Centers or local micro-lending agencies. Various financial institutions may ask you to tweak the plan when applying for a loan to conform to their individual lending requirements.

Organize Paperwork
Much like applying for a home loan or personal line of credit, you will need a variety of financial documents in order to apply for a small business loan. While requirements vary, plan to gather copies of your last two tax returns, three months of bank statements and a copy of your business license. If you operate an incorporated business, which is a business entity typically established by large companies, you may be required to provide more detailed information, such as articles of incorporation, corporate charter, bylaws and details about your governing principals.

Research Lending Institutions
Contact your local Small Business Development Center or local branch of the U.S. Small Business Administration for a list of financial institutions in your area that specialize in making small business loans. While the SBA does not make direct loans to small business owners, it works in conjunction with various lenders throughout the nation in providing SBA-backed loans to qualified small business borrowers. Contact lenders who appear to meet your criteria and ask for guidelines for small business loan applications.

Present Your Loan Request
Once you complete your loan application and gather all necessary documentation, you will likely be assigned a loan officer by the institution with which you’re applying. The loan officer will review your materials and may request an in-person or phone consultation to discuss your loan needs. You may be asked to elaborate on aspects of your business plan or clarify portions of your financial history. If your loan is denied, your loan officer may be able to instruct you on what you must do to qualify in the future, or refer you to other lending sources that may better suit your needs, such as angel investors or venture capital groups.

Grants for Small Business Women

Grants for Small Business Women

You may hear that grants to help women start businesses are found in great numbers, but it can often be hard to find one. When searching for grants, be aware that many scams exist, so thoroughly research any funding source before applying to something that sounds too good to be true. A real grant will not require applicants to pay back the grant money. Most times, grants for helping female small-business owners come from nonprofit organizations and large corporations.

Guardian Life Insurance Company of America
Guardian Life Insurance Company of America runs the Girls Going Places Entrepreneurship Award Program, which started in 2000. Budding entrepreneurs ages 12 through 18, who are taking steps to organize and manage their own businesses, are welcome to apply. Each applicant must submit a 250-word personal statement that addresses her thoughts about business leadership, community giving and financial independence. In all, $30,000 is granted to 15 finalists. The money can be used to further a business or fund college.

Guardian Life Insurance Company of America
7 Hanover Square
New York, NY 10004
212-598-8000
guardianlife.com

Iowa Department of Economic Development
The Iowa Department of Economic Development runs the targeted small-business assistance program. The program supports the creation and expansion of specific types of businesses. Equity grants of up to $50,000 are available to leverage SBA or bank loans. In order to be eligible for the grant, the business must be at least 51% owned, managed and operated by women, bring in annual gross sales of under $4 million and be operating for a profit.

Iowa Department of Economic Development
200 East Grand Avenue
Des Moines, IA 50309
515-725-3000
iowalifechanging.com/

The Amber Foundation
The Amber Grant is awarded by WomensNet.net, an online community for entrepreneurial women. Grants assist women who are trying to start home-based or online businesses; they must be used to upgrade technology, or pay for a website or other essential start-up expenses. As of 2010, the grants are $500 and the foundation awards them in March, June, September and December.

The Amber Foundation
womensnetnet@gmail.com
womensnet.net

Free Grants for Women Interested in Starting a Business

Free Grants for Women Interested in Starting a Business

Starting a business is not for the faint of heart. Grant assistance can help but will still require persistence and thorough knowledge of your business goals and the competitive market to succeed. A solid business plan should be completed before pursuing grant funds. Grant opportunities are abundant for the new entrepreneur to help launch her dreams.

Get SCORE Advice
The Service Corps of Retired Executives (SCORE) are volunteers across the United States. They usually are in al Small Business Administration office. These management professionals offer advise to would-be entrepreneurs. Consultation with one of them can save you time and money before developing the business plan. Their consulting advice is free and there is no limit to the number of times you can meet with them. Use them to flesh out your ideas and get more clarity on the viability of your business idea.

Get a Winning Business Plan
Small Business Development Centers assist entrepreneurs with developing a business plan. They can usually be found at a community colleges or chambers of commerce. These are low- or no-cost opportunities to work with professionals. They may also be aware of grant opportunities for which your business can apply.

The Power of Networking
National, online and local organizations are available to help women entrepreneurs. Savor the Success.com, Woman owned.com and Start Up Nation.com have sections for women in business. Magazines such as Black Enterprise, Hispanic Business Journal and Asia-Inc. offer insight. Other publications are Entrepreneur, Fast Company, Go, Pink, Minority Women In Business, Minority Business Entrepreneur and Women Business. Ladies Who Launch and Divas Who Dine, are national organizations that have local chapters. Look for them for support to your business.

Go to their events, get on the mailing list and read through their websites for news on grants. Corporations use these business avenues to get their grant opportunities out to the public.

Meet Your Politicians
Contact your city, county, state and federal representatives for funding opportunities. Tell them about your business goals and desire for grant funds. You will want a letter of support from an elected official to go with your application. They may also be aware of government funds available for businesses. Ask about enterprise or empowerment zones, which provided tax credits and some grants to startup or expanding businesses.

Government Grants
Unlike the private sector, the federal government has created a one-stop location for sourcing grants--www.grants.gov. This site sorts grants by category, agency or subject matter. The grant information FAQs are well-documented and provide a customer service contact for further questions. But don't limit your search to the business category only. Do a search by subject for the industry, people you will serve or hire, the location and the product or service you will deliver. Be careful: there are paid sites and consultants that will use these same sites and charge you for the same information.

Feeling Competitive?
If you are have a great concept and 1,500 online friends to vote for you, you have a shot at winning the ideablob.com competition and win $10,000. If you have a business plan already, try the businessownersideacafe.com competition for $1,000 or the Start Up Nation.com Leading Moms in Business Competition. If you are between the ages 12-18 you can apply for the Girls Going Places prize has $5,000 toward college goals and your business.

There are Tech Make Over competitions sponsored by smallbiz.att.com and then for real tech companies check out the QPrize by Qualcomm.com and the Lemelson-MIT prize, which starts at $100,000 for your invention.

Finally, a search on any search engine for business plan competitions will yield pages of competitions. However, before entering a competition, find out all you can about the sponsor and the requirements after the award. Contact previous winners and ask them about their experience. You want to make sure the competition is worth the effort.

Manage Your Expectations
No grant will fund 100 percent of your business but will help launch it. There will be some requirements for cash or investment from either bank loan or personal funds. Grant funds are not quick and can take many months before funds are released even after they are awarded. Make sure the business plan does not have deadlines that are in danger, because of slow grant funds.

There will also be the management of the grant once you receive. With government money there is a lot of paperwork before, during and after the grant. Reports of your progress and successes are required. Even with private funds some reporting may be required.