The Southern Credit Builder

07/14/2018

We Specialized in Helping Business Owners Get Business Credit Based on their EIN, not their SSN.

04/04/2018

Debt isn't always a bad thing, especially when it opens up new business opportunities. Here are five things you may think will hold you back from getting the financing your business needs, but probably won't.

03/21/2018

If your business has a DUNS number, then it also has a D&B (Dun & Bradstreet) credit report. If your business is brand new and just got its DUNS

03/21/2018

The Growth Dilemma seeks to help entrepreneurs and small business owners navigate the murky waters of capital acquisition by focusing on three critical success factors. Find out what they are after the jump.

03/21/2018

An LLC (Limited Liability Company) combines the tax benefits of a partnership with the limited liability status of corporations. Read on to learn more.

03/21/2018

Learn How To Get Financing to GROW Your Business.

Business Credit & Business Financing Get Business Credit & Business Financing to Start & Grow Your Dream Business. Entreprenuer reports that 90% of business owners know nothing about business credit. Those entreprenuers who do have business credit have unprecedented access to credit to grow, better....

02/26/2018

Small Business Loans for Minorities

In the United States, 29 percent of businesses are owned by people who identify with being part of a minority group, according to the U.S. Small Business Administration’s survey of business owners. Among minority and non-minority business owners alike, 25 percent do not seek startup financing. Of those who do, 57 percent dig into personal or family savings for startup costs.
However, minority businesses are less likely to seek private business loans (5 percent) than non-minority businesses (8 percent). Minority business owners tend to feel discouraged from getting private financing more so than non-minority business owners (30 percent vs. 16 percent), the SBA found. But research has shown that private startup funding can help boost sales and employment.
Without access to outside funds, minority business owners could be missing out on an opportunity to get farther ahead earlier in the game. The good news is that there are many different types of funding for minority-owned small businesses. You just have to know which types of funding works best for your needs.
Not sure what the best funding is for you? Here’s a roundup of the funding that is available to help your business thrive.
Traditional Financing
Before you look into types of funding that are geared toward minority small business owners, let’s look at traditional financing. What do you need in order to qualify for it? It depends, as some funders require that you have been in business for a certain number of years or that you have a certain amount of revenue or employees. Almost all traditional financing routes look at your personal credit score and income in order to decide whether or not to lend to you – unless your business has a stellar credit score.
How do you build your business credit score? It’s important to apply for credit as soon as you start your business since many factors, including the age, of your credit file impact your business credit score. The longer you’ve had a business credit card or line of credit, the better your score will be – so long as you’re responsibly paying it.
You might also consider opening a line of credit from one of your suppliers. These are payment terms that suppliers will extend you, from three to 60 days. Many of these suppliers report your payments to business credit bureaus, thus boosting your score.
Do You Have a Fair Shot?
You might be wondering if you have a fair shot at traditional financing as a minority business owner. Technically, traditional financing shouldn’t discriminate since they look at your financial details before deciding whether or not to lend to you.
But there are many ways in which minority business owners can be disadvantaged anyways. Studies show that minority entrepreneurs get much less in terms of loans and business funding whether from traditional loans or venture capital, according to the SBA. Brigham Young University also did a study that found that when minority business owners shopped for a small business loan, they weren’t given as much information or help and were more likely to be asked about their personal finances than non-minority business owners.
Types of Traditional Financing to Consider
There are all sorts of options these days when it comes to traditional small business financing. The first and most obvious option is to get a bank loan. A bank loan is a small business loan that you take out over a specific term length and pay back in monthly payments. It can come with a variable rate or fixed rate.
There are many benefits to a bank loan, but it could be difficult to qualify for one since they have very strict criteria and they don’t tend to cater to small businesses. For that reason, the borrowing minimums can often be quite high. It can also often take a while to get approved.
You might also consider getting a loan from a credit union. These can be easier to qualify for if you have a small business since their loans are better tailored to small business owners. You also could save on interest since credit unions are nonprofits that are meant to serve their members and are less focused on maximizing profit. The downside is that you have to be a member in order to borrow from a credit union and not everyone will meet the membership criteria at each credit union.
Online small business loans for minorities can be a practical choice. You’ll find many options in online lenders, and you can likely find minority business loans that are a good fit – whether you have bad credit or if you need just a small amount of money. The downside is that some online small business lenders have very high interest rates and others have repayment terms that don’t allow you to save if you’re able to repay your loan quickly. For that reason, it’s best to shop around because there are also some great online small business lenders.
A business line of credit can offer flexibility. It operates similarly to a credit card in that you can borrow money, pay it back, and then borrow money again. The downside is that lines of credit are usually variable rate credit vehicles, which means you could end up paying more over time than if you went with a fixed-rate small business loan. But a line of credit can be very useful for a business to deal with recurrent cash flow issues or emergencies.
One interesting option for financing is invoice factoring. Have you sent invoices to your clients and are you waiting to get paid? With invoice factoring, you don’t have to wait. You can use those invoices to get a cash advance. This can be useful in emergencies because a factoring company won’t check your credit before giving you the advance.
The downside is that this type of financing charges 3 percent to 5 percent for as little as a 30-day loan. That might not seem costly, but it actually can be – it works out to 36 percent to 60 percent when you calculate the annual percentage rate. You’re likely to find a cheaper option.
Finally, you might consider getting an SBA loan. The organization offers a couple different kinds of loans that are given out by different types of lenders from traditional banks to online lenders. The main difference between an SBA loan and another type of loan is that the SBA guarantees the loan. This means there is less risk for the lender, so they can offer you a better rate.
The SBA 7(a) loans allow you to borrow up to $5 million and have rates as low as prime plus 2.2 percent. The loan terms are 10 years for working capital, 10 years for new equipment, and 25 years for a real estate purchase. The challenge is that these loans take a long time to process, but there are also SBA Express loans, which allow you to borrow between $100,000 and $350,000 at as low as 4.5 percent above prime. The SBA will respond to your application within 36 hours, according to the SBA website.
Funding for Minorities
It’s always a bonus if you can qualify for free money. Here are some organizations that offer money you don’t have to repay.
1. MillerCoors Urban Entrepreneurship Series
This grant is open to everyone, but it has a specific focus on creating more diversity in entrepreneurship and past winners have been from diverse populations. To apply, you submit a business plan and those who are semi-finalists are then invited to live pitch events across the country. During the finals, five winning businesses will compete for the top prize of $100,000.
2. FedEx Small Business Grant Contest
FedEx runs a small business contest that is open to everyone and could provide a great boost to your business if you win. In order to apply, you have to create a video and submit a business plan. There are 10 winners, with the top team winning $25,000 cash plus $7,500 in services from FedEx, the second-place team winning $15,000 and $5,000 in services from FedEx, and eight other teams winning $7,500 and $1,000 in business services from FedEx.
3. First Nations Development Institute
Are you Native American, Native Hawaiian, or an Alaska Native? If so, the First Nations Development Institute has a number of minority business grants you could potentially qualify for. The organization started making grants in 1993 and have since given out 1,412 grants totaling over $29.8 million. It offers a number of different types of grant programs and a searchable database of the various opportunities.
4. BusinessGrants.org
Looking for minority small business grants? BusinessGrants.org has a lot of options in their database. The grants range from $500 to $100,000. Eligibility varies, but some are based on your ethnicity and gender. The organization also provides tips for helping you find local and federal minority small business grants you can access and apply for. It’s a great resource to use if you’re searching for business grants for minorities.
Investments and Other Opportunities for Minorities
When it comes to finding money for your business, you might not want to leave a single stone unturned. But while venture capital, accelerators, incubators, and other opportunities are attractive – they aren’t always accessible to minority business owners. According to the National Venture Capital Association, 89 percent of those who invest as venture capitalists are male and 85 percent are white. That can have a huge impact on the types of investments that they make and who they invest in.
The good news is that there are more venture capital firms being founded that are specifically focused on helping minority entrepreneurs succeed.
1. SBA 8(a) Business Development Program
While this is neither an investment opportunity nor an accelerator, it is an SBA program that can help you secure funding. It helps businesses that are at least 51 percent owned by someone who experiences cultural bias or bias based on their race or ethnicity. It can help you apply for minority business loans and also provide you assistance with things like training, management, tech, and business development.
2. Camino Financial
Started by Hispanic brothers who saw their mom lose her business due to financial issues, they work to help people who are first-time borrowers access capital for their business through loans. The company provides interest rates that start at 1.25 percent, do not require collateral, and can provide you with funding in as soon as 10 days. Those terms are competitive compared to others offered within the industry.
3. Founders First Capital Partners
A venture capital firm, Founders First looks for companies that are owned by founders in underrepresented and underfunded groups such as veterans, women, and ethnic minorities. Founders First Capital Partners funds companies that are already in business and have revenues of between $250,000 and $1 million, and it injects capital in order to help the companies grow.
It also prioritizes businesses that are located in moderate- to low-income areas. They run a 60-day Founders Business Growth Bootcamp that allows you to learn more about how to grow your business, connect with potential partners and investors, and build your network. The program offers $7,500 in cash prizes.
4. Intel Capital: Diversity Fund
Intel Capital is a fund by tech company Intel that provides venture capital support to underrepresented entrepreneurs. Intel put $125 million into the fund to boost diversity in the tech industry. It focuses on supporting minorities and women through the program. The fund invites diverse companies in the tech field to contact them with their business plan in order to access funding.
5. DigitalUndivided
DigitalUndivided is an incubator and accelerator aimed at helping black and Latina women in tech, entrepreneurship, and startups. It hosts a number of different events to support women of color, plus it has an incubator program called the BIG incubator that provides women-owned businesses with help with customer development, product development, company development, and seed funding. It also can connect you with mentors to boost your business.
6. 500 Startups Black and Latino Microfund
500 Startups is a venture capital firm that is designed to find the best startup entrepreneurs and provide them with the funding and support they need to build great businesses. The company has given away or connected business owners with hundreds of millions of dollars in investment capital, support, and accelerator programs.
It launched a $25 million microfund specifically geared to help support black and Latino business owners. The company plans on investing it in about 100 companies to boost minority businesses.
7. Kapor Capital
While Kapor Capital is not specifically for people of color, it endeavors to fund businesses started by minorities. It provides investment to companies that are in tech and at the seed stage. The company is interested in companies that provide better opportunities or outcomes for low-income communities or communities of color. It invests in almost any sector including social justice, food, health, and education.
8. Aspen Capital Fund
Aspen Capital Fund helps minority business owners build their brands and their businesses. The organization provides networking, knowledge transfer, and other types of help. This includes helping you access funding and assisting in building your customer base and strategy related to your market. It also runs a free Prosperity Workshop to help business owners better understand how to realize their goals.
9. NewMe Accelerator
The NewMe Accelerator program in Silicon Valley focuses on diversity in tech. This startup has helped founders raise over $20 million in venture capital. It offers a 12-week program based in San Francisco and a three-day program based in cities nationwide. It also makes investments and provides an online platform where you can learn more about how to build your business and become successful as an entrepreneur.

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02/24/2018

Buying tradlines to build business credit is a REALLY bad idea! The issue is that when the reporting agencies sniff out the companies who sell these, they red flag and shut down all business reports that have trades from that company. This is something we see happen all the time. Yesterday, I even saw this alert on a client's credit report "It is noted that over the past 12 months, there have been a high number of customer inquiries on the company, including numerous inquiries from a credit coaching company that D&B has placed on information alert status." What's happened here is a company that sells trades is pulling this client's report, and that alone has created alerts on her report that she's struggling to remove. If she would've bought their trades, her profile would be shut down. But even with them pulling her report, it's still populating alerts on her report, showing how much D&B despises these companies and puts anyone in alert status who has anything to do with them. Everyone, avoid companies that sell business tradelines like the plague, there's all type of backlash you'll incur having anything to do with them.

02/24/2018

Business 101 teaches that entrepreneurs must begin almost immediately to build company credit. That advice has always rankled a certain breed of DIY business owners, the ones who find debt of any kind anathema. Now, though, a new study demonstrates that borrowing money confers a huge advantage on a new business — but only when the debt is in the company’s name. Companies financed by personal debt actually perform worse than those with no debt at all.

The findings are the work of finance professors Rebel Cole of Florida Atlantic University and Tatyana Sokolyk of Brock University in Ontario. Using data found in the Kauffman Firm Surveys, collected annually by the Kauffman Foundation from nearly 5,000 companies that began operating in 2004, the researchers have concluded that a company using a business bank loan to finance its start reported nearly twice as much revenue after three years as a startup of similar size that took on no debt. By contrast, that same company financed by personal debt — say home equity loan or personal credit card — had on average 57 percent less revenues than one that hadn’t borrowed. A company with business debt, then, generated on average more than four times as much revenue as one with personal debt.
Comparing survival rates, the researchers found that the chance of making it past three years was 19 percent higher for business borrowers than for companies without debt. The survival rate for businesses with personal debt was only slightly higher than for companies without any debt. There is a limit, though, to how much debt helps: the study finds that firms with more debt are also more likely to fail.

Cole and Sokolyk offer three possible explanations for their results. For one thing, they say, the businesses most likely to succeed are the ones that ask for bank loans in the first place. Applying for a bank loan consumes time and other resources, so going to the trouble signals the business is serious. But banks are also good judges of what makes a successful business. “If you’re able to get a loan in the name of the business, then the bank is actually taking a look at the business,” Cole explains. But then, having picked potential winners, banks “monitor them and provide mentoring to them” — which further improves borrowers’ performance.
But why does personal borrowing predict such poor performance — worse than taking on no debt at all? It could be a question of selection again, especially if banks are steering the losers toward personal debt. And Cole notes than an owner who immediately borrows from a personal line has less room to grow. “If a firm is borrowing in the name of the owner at start-up, then it has used up at least some of that debt capacity, whereas a firm that does not borrow in the name of the owner retains that debt capacity to use in subsequent years if needed,” he says. “The firm is capital-constrained from the beginning, and must spend less on investments that produce future revenues.”

The researchers can’t determine who is doing the selecting that matters most here: the banks picking winners and losers, or the businesses that choose to present themselves to banks in the first place. But Cole says entrepreneurs who skip the business loan and go straight to the home mortgage, either because they can’t be bothered to jump through the hoops or they figure they’ll ultimately be rejected, are doing themselves no favors.
“It’s really almost a story of financial literacy,” he says. “We still have millions of consumers who don’t have a credit score because there’s not enough information about them and their ability to repay a loan. Businesses are much worse, because there are far more of them that don’t borrow in the name of the firm. Probably half of them or more don’t have a borrowing track record.”

02/23/2018

Do you know about getting a credit report for a business? You need to keep on top of your own corporate credit reports and check other companies’ business credit reports, too. But how?
Your smartest move as a business owner is to remain on top of your business credit reports from PAYDEX, Equifax, and Experian. There are three big credit reporting agencies for small business and you really should assess all three of them on a regular basis as they use marginally different touchstones therefore moving the needle for one can move the needle for the two others, although perhaps not as much. Do not permit your business credit scores slide, as you need to pounce on any errors fast as you can, and also detect anything which is dragging your scores downward and after that take corrective steps. You can acquire your reports easily and stay right on top of all three scores by following a few basic steps.
PAYDEX
Dun & Bradstreet’s PAYDEX score of your business can end up being among the principal reasons why your business receives credit in any way. D & B provides Credit Signal, which is a method to monitor your credit score by having the reports come immediately to you, for a price. You may find the expense is well worth it to avoid the annoyances that can stem from letting this score slip, and to not need to develop and stay on top of the schedules and reminders you might need to keep up with if you do not utilize it.
Don’t wish to make use of Credit Signal? No problem, as you can obtain your PAYDEX report by way of D & B and, if needed, you can speak with their Customer Service department (this department exists as a part of Dun & Bradstreet itself). Plus, in order to review your PAYDEX report, check out what D & B provides, which is a sample report and even some higher level direction in how to decipher it.
Equifax
Equifax, one of the major credit reporting bureaus, offers a risk monitoring service which is easier as it enables reports to come directly to you. If you don’t want to purchase continual reports, you can alternatively order your company’s Equifax report. Also, if you want to question your business’s Equifax report, you can do so by adhering to the information on their web site. You can learn how to evaluate your Equifax report by taking a look at a specimen of their reports.
Experian
Experian, another big credit reporting company, also provides a way for obtaining reports sent to you for a cost. For this reason you can keep track of your Experian small business credit score here and the setup is easy. Having said that, if you would rather not get regular reports (and purchase them), then you can order an individual Experian report for your firm on their site. Also, if there are any problems or errors, you can question any errors on your business’s Experian report if you follow the directions on their website. Find out about reading through your Experian report by evaluating an example Experian business credit report.
Oftentimes, it is a good idea to hand over a few bucks to ensure you get your company credit reports consistently. It’s a lot less complicated than to have to remember to do this and you’ll probably look at these reports more carefully, as they come at a cost. Stay on target and use the tools that these credit reporting firms provide, and make your life less complicated. It goes without saying; you’ve already got enough on your plate.
Due to the recent data breach, there are even more reasons to go over your small business and individual credit reports, and be vigilant about any mistakes you catch.

02/22/2018

The small business lending space has undergone a massive shift in the last decade. Where banks and credit unions once reigned supreme, fintech.

01/03/2018