WANT TO IMPROVE YOUR BUSINESS CREDIT & FUNDABILITY?
Subscribe to Our
Weekly Email Newsletter to Get Actionable Credit Building & Financing Info
We Respect Your Privacy
Published By Janet Gershen-Siegel at April 7th, 2018
LenCred is one of several lending companies in the online space. They are based in Blackwood, NJ and Bentonville, AR. Welcome to this, one of our online lender reviews.
They serve as a small business loan broker, mainly to startup companies and newer businesses. LenCred works with companies which need from $25,000 – $200,000 in financing. There are no revenue requirements; the companies which work with them tend to have $0 – $250,000 in annual revenues. Their most popular form of financing is unsecured financing. We look at the specifics and drill down into the details.
LenCred is located online here. Their physical address is in Bentonville, Arkansas. You can call them at: (888) 783-1503. Their contact page is here: https://lencred.com/contact/. You can email them at: [email protected].
You can get $25,000 – 150,000 or more. However, you will be denied if you have a consumer credit utilization rate of over 30%. Also, you can’t have any derogatory or delinquent accounts reporting on your credit profile. Late monthly payments, collections, unpaid tax liens, repossessions, and bankruptcies will get your application for an unsecured business line of credit denied. You also can’t have a lot of recent hard inquiries (in the last six months).
They have a 0% introductory rate.
They do not obtain SBA Loans or give them out. Rather, they can help companies apply for these.
$1,000 – $5 million is available in funding through this lender. They will help you get equipment financing. However, they do not seem to actually provide it.
Online lender LenCred offers set terms. Equipment which will go obsolete quickly (e.g. computers) works better with a lease. And for equipment which will not become obsolete quite so quickly (or you need it for a good 5 years or more), a loan tends to work better.
Your business can get up to $5,000,000. For equipment financing, you often need a FICO score of 650 or better. Some lenders require that you be in business for at least one year and be generating $50,000 in revenue.
There is a monthly fee which does not appear to be specified on their website.
Learn business loan secrets and get money for your business.
Advantages are that unsecured business funding is often a great way for startups to get the money they need, and they do not seem to have an annual revenue requirement unless you have bad personal credit. There is also the matter of the 0% introductory rate. This particular lender also seems to be flexible when it comes to borrowers with less than stellar credit.
The biggest disadvantage is that the time to funding is slower compared to a number of other lenders in the online space. Another disadvantage is that entrepreneurs who have been relying on their personal credit cards to fund their businesses are probably going to have too high a credit utilization rate to qualify for LenCred’s offerings.
This is credit in a business’s name. It doesn’t link to an entrepreneur’s consumer credit, not even if the owner is a sole proprietor and the solitary employee of the small business.
Accordingly, a business owner’s business and individual credit scores can be very different.
Since company credit is distinct from personal, it helps to protect a business owner’s personal assets, in the event of legal action or business bankruptcy.
Also, with two separate credit scores, a small business owner can get two different cards from the same vendor. This effectively doubles buying power.
Another benefit is that even startup companies can do this. Visiting a bank for a business loan can be a formula for frustration. But building small business credit, when done correctly, is a plan for success.
Personal credit scores rely on payments but also other elements like credit usage percentages.
But for small business credit, the scores really merely depend on if a company pays its debts on time.
Establishing business credit is a process, and it does not occur without effort. A business has to actively work to develop company credit.
That being said, it can be done easily and quickly, and it is much swifter than establishing personal credit scores.
Merchants are a big aspect of this process.
Undertaking the steps out of order will cause repetitive denials. Nobody can start at the top with small business credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.
A business needs to be fundable to loan providers and vendors.
That’s why, a company will need a professional-looking web site and e-mail address. And it needs to have site hosting from a company like GoDaddy.
And also, business phone and fax numbers need to have a listing on ListYourself.net.
Additionally, the business phone number should be toll-free (800 exchange or similar).
A small business will also need a bank account dedicated strictly to it, and it needs to have every one of the licenses necessary for operating.
These licenses all have to be in the perfect, correct name of the business. And they need to have the same company address and phone numbers.
So note, that this means not just state licenses, but potentially also city licenses.
Learn business loan secrets and get money for your business.
Visit the Internal Revenue Service website and obtain an EIN for the small business. They’re totally free. Choose a business entity like corporation, LLC, etc.
A company can begin as a sole proprietor. But they will more than likely want to change to a variety of corporation or an LLC.
This is in order to decrease risk. And it will make best use of tax benefits.
A business entity will matter when it involves taxes and liability in the event of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. Nobody else is responsible.
If you run a small business as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.
If you do not, then your personal name is the same as the small business name. Hence, you can find yourself being personally liable for all company financial obligations.
And also, per the IRS, by having this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 probability for corporations! Avoid confusion and noticeably lower the odds of an Internal Revenue Service audit as well.
But don’t look at a DBA filing as being anything more than a steppingstone to incorporating.
Start at the D&B web site and obtain a free D-U-N-S number. A D-U-N-S number is how D&B gets a business in their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s websites for the company. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.
By doing this, Experian and Equifax will have activity to report on.
First you should establish trade lines that report. This is also referred to as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can begin to get retail and cash credit.
These varieties of accounts often tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.
But to start with, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are ordinarily Net 30, instead of revolving.
Hence, if you get approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, like within 30 days on a Net 30 account.
Learn business loan secrets and get money for your business.
Once there are 3 or more vendor trade accounts reporting to at least one of the CRAs, then move to retail credit.
Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the small business’s EIN on these credit applications.
Are there more accounts reporting? Then move to fleet credit. Use this credit to buy fuel, and to repair and take care of vehicles. Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the small business’s EIN.
Have you been responsibly handling the credit you’ve up to this point? Then move to more universal cash credit. These tend to be credit cards from MasterCard. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.
These are commonly MasterCard credit cards. If you have more trade accounts reporting, then these are feasible.
Know what is happening with your credit. Make sure it is being reported and attend to any inaccuracies ASAP. Get in the practice of checking credit reports. Dig into the details, not just the scores.
We can help you monitor business credit at Experian and D&B for 90% less.
Update the information if there are errors or the information is incomplete. At D&B, you can do this at: D&B D-U-N-S Number. For Experian, go here: Experian Business Credit Information. And for Equifax, go here: www.equifax.com/business/small-business.
So, what’s all this monitoring for? It’s to contest any mistakes in your records. Mistakes in your credit report(s) can be corrected. But the CRAs generally want you to dispute in a particular way.
Disputing credit report mistakes generally means you mail a paper letter with duplicates of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always mail copies and retain the originals.
Fixing credit report inaccuracies also means you specifically itemize any charges you dispute. Make your dispute letter as crystal clear as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you mailed in your dispute.
Always use credit smartly! Never borrow beyond what you can pay off. Monitor balances and deadlines for repayments. Paying off punctually and completely will do more to raise business credit scores than just about anything else.
Building small business credit pays off. Good business credit scores help a small business get loans. Your lender knows the business can pay its financial obligations. They understand the business is bona fide.
The small business’s EIN attaches to high scores and lenders won’t feel the need to require a personal guarantee.
Business credit is an asset which can help your small business for years to come. Learn more here and get started toward growing small business credit.
The companies which will most likely do well with LenCred need financing but can afford to wait a month. Companies which will not do well are those where the entrepreneur has been relying too heavily on personal credit, thereby driving up their credit utilization rate. The monthly revenue requirement is high – a company just getting on its feet is not going to qualify. If your business can’t meet the monthly revenue requirement, then you may be better off working with one of the many LenCred competitors.
And finally, as with every other lending program, whether online or offline, remember to read the fine print and do the math. Go over the details with a fine-toothed comb, and decide whether this option will be good for you and your company. In addition, consider alternative financing options that go beyond lending, including building business credit, in order to best decide how to get the money you need to help your business grow.