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3 small business financing lessons by Nerdwallet

Business credit

3 small business financing lessons by Nerdwallet

3 small business financing lessons by Nerdwallet

Venice-based Solé Bicycles isn’t your typical bicycle company. Founded in 2009 by two college buddies, Solé offers stylish and affordable bikes that are as unique — and practical — as you are. Last year, they applied for a Funding Circle loan in the airport waiting for a flight to China. By the time they landed, the loan was processing. Now that’s what we call fast and fair financing!

Read more about their small business success story over at Nerdwallet, including some advice from Sam Hodges, our co-founder. Hodges offers three main tips for small business owners looking for financing with Funding Circle or other similar lenders.

1. Be transparent and honest about why you need the money

“The problem is, if someone gives us an answer that doesn’t really make any sense, that’s almost a decline outright, simply because we don’t believe that the operator is credible and will use the money in a responsible way,” Hodges says.

2. Gather all of the necessary paperwork in advance

Every lender, including Funding Circle, will ask for a standard set of information, including a couple of months’ bank account statements, two years’ worth of tax returns, interim financials, and basic documentation that shows the individual borrower is legally tied to the business, according to Hodges.

“So it’s really helpful for a small business owner to make sure you have all that stuff; put it into PDF files on your computer — that way when you apply for the loan, it’s all there and it’s an efficient transfer of information,” Hodges says.

3. Clean up your credit

Small business loan applicants should take a hard look at their credit history and clean up any errors before applying, as credit scores affect your ability to get a loan, and the size and cost associated with the loan if you are approved.

“It’s really important to know if you’ve been delinquent on any payments,” he says. ‘If you’ve been bankrupt, when was it? If it was recently, you kind of have to have an explanation on that. Do you have any tax liens on your business? Are there any other adverse actions on your credit profile, like any bills outstanding?”

The good news is that a negative credit report can be cleaned up. Reach out to whomever you owe money to, pay it off and have the credit bureau remove the negative mark. “It’s very much worth doing that work,” Hodges says.

Read more at Nerdwallet.

Tags: Business credit

Updated: Feb 25, 2015

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