Published By Janet Gershen-Siegel at June 12, 2018
We reviewed Yellowstone Capital, one of several lenders in the online space.
Written by Janet Gershen-Siegel
Yellowstone Capital offers Business Capital. They are an ISO (independent sales organization).
We look at the specifics and drill down into the details.
Yellowstone Capital is located online here: http://yellowstonecap.com/. Their physical address is in Jersey City, NJ.
You can call them at: (855)972-2748. Also, you can contact them at: [email protected].
Here is a link to their About page: http://yellowstonecap.com/about.
In 2015, they had in a $1.5 million deal which, at the time, was their largest ever deal.
Yellowstone offers what are called C and D paper loans. These are sub-prime loans.
These are types of alternative, or non-conforming, loans, often for borrowers with poor credit. The term “paper” just means when a lender makes a loan, it takes back a promissory note. And it takes security interest, like a mortgage. So those are pieces of paper.
Non-conforming loans are more risky than conforming ones, and are alphabetically classified as according to risk. Non-conforming C loans are less risky than D loans. D loans have the lowest classification.
There are far fewer lenders who want to make C and D loans. Hence there is less competition for these borrowers.
This causes interest rates to be higher. Also, most lenders view these borrowers as being more risky and more desperate.
That perception also, understandably, pushes up the interest rates.
Sometimes alternative loans can be seen as predatory. Borrowers in such a situation should always be careful that there are no significant prepayment penalties. Those are common with non-conforming loans, and they can prevent you from refinancing.
This online lender offers same-day approvals. Yellowstone Capital funds merchant cash advances. They will handle high-risk borrowers. And collateral is not necessary for working with them.
Yellowstone Capital’s flat fees are generally x1.4 – x1.6 of the amount advanced. However, the origination fee and APR are not known. This is because their website is not very informative.
Advantages include fast approvals and acceptance of high-risk borrowers. Also, they offer flat fees.
Disadvantages include a lack of transparency regarding fees. Their website has very little information. However, a high-risk borrower may have few other options. Also, any borrowers in the C and D paper categorizes should know the interest rates will be high.
And this is by definition.
Given that corporate credit is separate from consumer, it helps to secure an entrepreneur’s personal assets, in case of litigation or business insolvency. Also, with two separate credit scores, a small business owner can get two different cards from the same merchant. This effectively doubles purchasing power.
Another benefit is that even startups can do this. Visiting a bank for a business loan can be a formula for disappointment. But building corporate credit, when done properly, is a plan for success.
Personal credit scores depend on payments but also various other factors like credit utilization percentages. But for company credit, the scores truly just depend on whether a company pays its bills promptly.
Building business credit is a process, and it does not occur automatically. A small business has to actively work to develop company credit. Nevertheless, it can be done readily and quickly, and it is much faster than building individual credit scores.
Merchants are a big component of this process.
Performing the steps out of order will lead to repetitive denials. Nobody can start at the top with small business credit. For instance, you can’t start with store or cash credit from your bank. If you do you’ll get a denial 100% of the time.
A business has to be genuine to loan providers and merchants. That is why, a small business will need a professional-looking web site and email address, with website hosting from a company such as GoDaddy.
Also business telephone and fax numbers ought to have a listing on 411.com.
Likewise the company phone number should be toll-free (800 exchange or similar).
A business will also need a bank account dedicated solely to it, and it has to have all of the licenses essential for running. These licenses all have to be in the perfect, appropriate name of the corporation, with the same company address and telephone numbers.
So note that this means not just state licenses, but possibly also city licenses.
Visit the IRS website and acquire an EIN for the corporation. They’re totally free. Select a business entity like corporation, LLC, etc.
A small business can begin as a sole proprietor. But they will more than likely want to change to a variety of corporation or partnership to lessen risk and optimize tax benefits.
A business entity will matter when it pertains to taxes and liability in case of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. No one else is responsible.
If you run a company as a sole proprietor, then at the very least be sure to file for a DBA (‘doing business as’) status.
If you do not, then your personal name is the same as the small business name. Hence, you can end up being directly liable for all business debts.
Additionally, according to the IRS, by having this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 possibility for corporations! Prevent confusion and substantially reduce the odds of an IRS audit at the same time.
Begin at the D&B website and get a totally free DUNS number. A DUNS number is how D&B gets a small business into their system, to produce a PAYDEX score. If there is no DUNS 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 https://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.
In this manner, Experian and Equifax will have something to report on.
First you ought to build trade lines that report. This is also referred to as vendor accounts. 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 obtaining revolving store and cash credit.
These varieties of accounts often tend to be for the things bought all the time, like coffee, 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 starter credit when you have none now. Terms are ordinarily Net 30, instead of revolving.
Hence if you get an approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, such as within 30 days on a Net 30 account.
Net 30 accounts must be paid in full within 30 days. 60 accounts have to be paid in full within 60 days. In comparison with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you used.
To kick off your business credit profile the right way, you should get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then make use of the credit.
Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
Not every vendor can help like true starter credit can. These are vendors that will grant an approval with hardly any effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
But you may need to apply more than once to these vendors, and you may need to buy some things you don’t need to have, to validate you are dependable and will pay promptly. Consider donating nonessential things to charitable organizations.
Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, progress to revolving store credit. These are service providers which include Office Depot and Staples. These companies are likelier to have products you need.
Use the corporation’s EIN on these credit applications.
One example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a DUNS and a PAYDEX score of 78 or more.
Are there 8 to 10 accounts reporting? Then move onto fleet credit. These are businesses such as BP and Conoco. Use this credit to purchase, repair, and maintain vehicles. 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 cash credit. These are businesses such as Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.
These are businesses such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are normally MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.
Know what is happening with your credit. Make certain it is being reported and take care of any inaccuracies as soon as possible. Get in the practice of taking a look at credit reports and digging into the particulars, and not just the scores.
We can help you monitor business credit at Experian and D&B for only $24/month, here. And update the details if there are mistakes or the details is incomplete.
So, what’s all this monitoring for? It’s to dispute any inaccuracies in your records. Errors in your credit report(s) can be taken care of. But the CRAs generally want you to dispute in a particular way.
Disputing credit report errors normally means you mail a paper letter with duplicates of any proof of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always mail copies and keep the original copies.
Disputing credit report mistakes also means you precisely detail 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 sent in your dispute.
Always use credit smartly! Don’t borrow beyond what you can pay off. Monitor balances and deadlines for repayments. Paying off in a timely manner and in full will do more to boost business credit scores than nearly anything else.
Building corporate credit pays. Great business credit scores help a small business get loans. Your loan provider knows the business can pay its debts. They recognize the company is authentic.
The small business’s EIN links to high scores, and loan providers won’t feel the need to call for a personal guarantee.
Any business owner should always be wary of funding sources which are not transparent with their fees. Maybe Yellowstone Capital online lending reveals all once you apply. But why should any business owner have to wait?
Companies which will work best with Yellowstone Capital are high-risk borrowers. This is because they may have few other options for C and D paper loans.
However, other borrowers should press for more transparency. Or they should be ready to look elsewhere if Yellowstone Capital is not forthcoming.
Because this should always be basic and easy to find information.
And finally, as with every other lender, always read the fine print and do the math. Go over the details with care. Better yet, work with a financial professional with no affiliation with the lender. Decide if this option will be good for you and your company.
In addition, consider alternative financing options that go beyond lending. These are options such as building business credit.
However, only you can best decide how to get the money you need to help your business grow.