Small Business Loan Options-Part 1


Complete Video Transcript

0:00so we’re talking about the one major mistake that business owners make when
0:03trying to find their business
0:04that mistake is typically Co mingling personal credit
0:07finances with their business credit finances and they do that in a
0:12variety of ways there’s not just one way to do that so we’re gonna take a look at
0:16a few examples at this uncover-up address some solutions to that
0:20example number one that I’m sure all view our existing business owners have
0:24made this main mistake is that you get excited you start your business you got
0:29a good business idea you want to get up
0:30up and running you open your business bank account you collect up whatever
0:33resources you can from savings or from credit cards or home equity
0:38or loans from friends and family you deposit those resources right into that
0:43new bank care
0:44big mistake so let’s take a look at what I there’s a better way to handle this
0:47and that is
0:48along the same ones you start your business you open your business pay
0:51care here’s where you stop you collect up those same resources from all those
0:55same places
0:56and you open a certificate up deposit then you use that certificate of deposit
1:01to secure
1:02a business law you get the same amount of cash and working capital to work
1:06within your business but now you’ve created something of great value to your
1:10business and we’ll talk about why
1:12what you’ve done is you’ve just created a business loan that reports and when it
1:16to the business credit agencies it does not report is being secured
1:20what it does do is it does alert other potential business lenders that your
1:24business was worthy of getting approved at the bank obtaining a
1:28bank business loan is one of the hardest type A loans you can get but now you
1:32what she’d done this you just put yourself on the radar
1:35all other business lenders out there they now can see on your business credit
1:39you have a business bank well in order to accomplish this though you’ve got to
1:44check with your bank for see if they will do this
1:47then you have to make sure that your bank will report your new business loan
1:50to the business credit reporting agencies cuz
1:52many banks don’t inside our system it will show you later
1:56we will provide you with the list to banks that do both ago state will
1:59provide the business loans under the secured CD
2:02and they will also report to the business credit reporting agencies on
2:05your behalf example number two
2:08Co mingling your personal credit finances with your business credit and
2:12you might have good personal credit scores and Europe the belief that you
2:17use those scores to secure business finance and in many cases
2:20that’s correct care having personal credit scores in the
2:23680 to 700 range will allow you to secure
2:27financing for your business but if you haven’t taken the time to know
2:31if your business is in what’s called blender compliance
2:34and instead you just go out and apply something
2:37bad can happen unfortunately you get the client and you didn’t know why
2:41well you got to climb because you filled out a business loan application
2:44at loan application was just submitted into a computerized system
2:48the computerized system has a series of underwriting guidelines that it checks
2:53typically the loan officer at the bank or loan officer at the business lending
2:57organization doesn’t know all those business
3:00underwriting guidelines on this case you submitted your loan application
3:04showing a residential address for your business
3:07as a primer address for the best and you didn’t know that
3:11currently about eighty to ninety percent a business lenders will decline
3:15home-based businesses
3:16therefore you weren’t ready to apply you really didn’t know why
3:19now you’ve damaged both your personal and your business credit because you
3:23have enquiries on both
3:25that’s gonna make it harder for you to get the financing secured the war
3:29the solution to this is to know that your business is truly pre-qualified
3:33and ready to apply for you actually start apply
3:36example number three is that your operating your business as a sole
3:39proprietor partnership
3:40and this is probably sixty percent of the businesses out there operator the
3:44sole proprietor partnership is a viable forms a business
3:47the problem is is that your in business but you’re not a business
3:51this means that you do not have a business entity and everything that you
3:55comes back to you personally Sep because I’ve your
3:59experience in the Anderson law for tell us a little bit about this in effect
4:03this coming out sure absolutely court the problem with that is not only are
4:07you the business in the sense that your credit is going to be the only criteria
4:12they can use to make the business
4:13or to make the lending decisions a criticism but there’s absolutely no
4:17protection between you
4:19any liability concerns so your exposure is total
4:22if you are the business and your sole proprietor using a
4:26social security number for example and your flight on the dotted lines for all
4:30the credit not hard to imagine
4:32that should there be some soda bottle of terrorist
4:35for separating your personal credit from your business credit that not only
4:38important for the credit building
4:40but it’s absolutely vital in terms of that the protection and the people
4:44have a business entity there’s nothing to build business but so it is probably
4:47too kind to people that need probably want to keep it that way and you gonna
4:52be careful about it and if you’ve got bad credit and certainly you’re going to
4:55the company to develop its own credit wherewithal to be able to help you at
5:00exactly so what we’re talking about is having an entity which is
5:03either an LLC or corporation that ban can take on the liability for any debtor
5:07actions the company
5:09which if you don’t do that has become a major risk to your personal credit and
5:13basically you commingle them again so there we have three examples
5:17a Co mingling your personal credit with your and finances with your business
5:22credit with finances and the solution to that is
5:24have a separate business legal entity and not just that it’s everything purse