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Fundability Foundation™

A foundation comes from how your business is set up. It has to be set up as a Fundable entity separate from you, the owner.

The first step in setting up Fundability Foundation™ is to set up your business separately from you, its owner. One way to get started is to give your business its own contact information.

This includes a professional phone number. And you can get a business phone number that will work over the internet (VoIP) instead of phone lines.

Your business address needs to be a physical address where you can receive mail. P.O. boxes, UPS boxes, iPostal, and the like do not work for establishing business credit or getting financing. In fact, having the wrong kind of address or even just listing different addresses on different documents is enough to get you denied for a loan. Our team can help walk you through this.

A virtual office is an option, as it offers a physical address for a fee. A home address is acceptable, so long as it is consistent throughout all your documentation.

Incorporating your business as an LLC, S-corp, or corporation. It offers some protection from liability. Corporations are considered to be separate entities from their owners. As a result, corporations can have their own credit. By incorporating, you create a layer of protection between your business’s debts and actions and your own.

Which corporate option you choose does not matter as much for Fundability as it does for your budget, needs for liability protection, and tax incentives. Talk to your attorney or a tax professional for advice on which option is best for you.

An EIN is an identifying number for your business working a lot like your SSN works for you personally. For a Fundable business, you need to apply for and use an EIN. You can get one for free from the IRS. When you apply for your EIN the information you use must be the same you used with your secretary of state during incorporation.

You have to open a separate, dedicated business bank account. It will help you keep track of business finances and help keep them separate from personal finances for tax purposes.

In addition, there are several types of funding you cannot get without a business bank account. Many lenders and credit issuers want to see one with a minimum average balance. Plus, you cannot get a merchant account (to take credit card payments) without a business bank account.

A business must have all the necessary licenses it needs to run. The best place to start is your Secretary of State’s office and local government offices. Depending on your industry, state, and or local government it is best to check before you start operating and applying for any kind of financing.

Your business website should be professionally designed and user-friendly. Pay for hosting and a professional email address with the same URL as your website. Avoid using a free service for hosting or email.

Business Credit Reports

The main sources for business credit reports are Dun & Bradstreet, Experian, Equifax, and FICO SBSS.

Protect your business credit scores with our exclusive Bureau Insights™

There are other business data agencies that affect credit reports indirectly. Two examples are LexisNexis and The Small Business Finance Exchange. These agencies gather data from a variety of sources, including public records. You cannot access or change the data these agencies have on your business, but you can ensure that any new information they get is positive. This can help counteract negative information from the past.

In addition to the EIN, there are identifying numbers that go along with your business credit reports. Some of them are simply assigned by the agency, like the Experian BIN.

You must proactively apply for a D-U-N-S number from Dun & Bradstreet. To get one for free, you must apply via the D&B website.

Both personal and business credit scores are a huge piece of Fundability.

Credit history consists of a number of things including

The more accounts reporting on-time payments, the stronger your credit score will be.

All business information must be consistent across the board. Many loan applications are turned down each year due to fraud concerns simply due to inconsistencies, some of them seemingly minor.

Other agencies have information related to your personal finances that can affect the Fundability of your business. FICO is one example. Many lenders use them for the personal credit score. Almost all traditional lenders look at personal credit in addition to business credit when underwriting a business loan.

ChexSystems also has information. They track bad check activity, which affects your bank rating. If you have too many bad checks, you will not be able to open a bank account.

Personal Credit History

Your personal credit score from Experian, Equifax, and Transunion is important. The number one way to get a strong personal credit score or improve a weak one is to make payments consistently on time.

Business credit can help to assure that business expenses and the debts of running a business do not show up on your personal credit reports.

The Application Process

The timing of the application is one of the biggest factors in this. If you know there are changes coming to your credit report, like it is time for a bankruptcy to roll off or you recently paid off a large amount of debt, make sure those changes are actually on your report before applying.

Make sure your business name, business address, and ownership status are all verifiable. Choose the right lending product for your business and your needs. This can make all the difference.

Financials

Business financials include tax returns and financial statements.

For maximum Fundability, lenders like to see at least 3 years of business tax returns. All tax returns must be up to date and taxes paid.

Business financial statements include a statement of income and expense, a balance sheet, and a statement of cash flows. Credit and loan providers want to see that the business is profitable. They tend to prefer to get at least the past three years.

Audited financial statements provide even stronger Fundability, as these statements will already have notes explaining any major fluctuation.

Your personal financials are also included here, such as recent tax returns.

It is best to have an accounting professional prepare business financials.

When it comes to personal financial statements, often tax returns for the previous three years will suffice. Have a tax professional prepare them. Other information lenders may ask for include check stubs and bank statements, among other things.

Your financials also include any business or personal collateral you may be able to offer to secure a debt.