Why You Can’t Get Business Credit – And How to Fix It!

It’s enough to drive you mad!…  Big banks got $245 billion in government bailouts under the Troubled Asset Relief Program (TARP) – sticking US taxpayers with the bill.

That was in 2008.  Did small business lending loosen up?

Were new businesses finally able to get credit to hire employees, buy equipment and expand?

Not By a Long Shot!

In fact, according to a July, 2010 report by the U.S. Small Business Administration (SBA), 41% of small business owners report they can’t get enough financing – up from 22% in 2008.  Not only that, loans to new small businesses fell a whopping 33% between 2008 and 2009.

But I digress…

While big banks ratcheted-down lending to small businesses, there’s a silver lining – and a big one at that.   I’ll get to that in a moment.

The simple fact is, banks are still lending.   They’ve just raised the bar, when there was almost no bar before.

In the early 2000’s, lenders gave credit to any business with a dream and a wish.  New businesses got monster credit lines – even if they didn’t deserve them.  As long as lenders kept their defaults low, nobody cared.

Then the real estate market and the banking markets crashed.   Those same risky small businesses stopped paying their credit cards and loans, and small business credit defaults shot through the roof.

In fact, business credit card issuer Advanta’s credit card defaults not just shot through the roof – but shot to the moon – reaching 57% in July, 2009.   They filed for bankruptcy later that year and were seized by the FDIC in early 2010.

So, where’s the silver lining?

Actually, there are two silver linings…

At Last! – Business Lending is Breaking Out of a DEEP-FREEZE

First, according to a July, 2010 survey by the Federal Reserve, lenders are loosening credit restrictions for the first time since 2006.   That’s great news, because it means they’re lending more money to more small businesses.

And, second, a $30-billion Small Business Jobs and Credit Act recently passed.   Unlike the TARP bailouts which helped big banks, this bill helps small businesses directly.

It will give community banks the power to leverage the $30-billion fund to extend up to $300-billion in new loans to new businesses and small businesses.

So the big question is…

How Can You Get a Piece of This Gargantuan Business Credit Pie?

While banks are relaxing their lending restrictions, don’t expect them to return to pre-2008 levels.   The game of business credit has changed for good.

The simple fact is, you need a new playbook.  Following business credit-building advice from even 2-3 years ago simply won’t work today.

Banks will have more flexibility and freedom to lend to small businesses, but they’re also being watched like hawks by Federal watchdogs.  They’ll make more bets on safe small businesses – not risky bets on unproven companies.

What that means to you, is your company must become more creditworthy.

What Makes a Business Creditworthy?

Banks expect to see your company has experience handing many business credit lines.

As an individual, having too many credit accounts might look bad to prospective lenders (although that’s more myth than reality, provided you don’t carry large balances).

With businesses, it’s just the opposite.  Each credit account on your company’s credit report a reference and endorsement of your company.

Today, you need at least five tradelines showing on your business credit reports, just to get approved for basic business credit cards – like gas cards.

And, to get approved for branded credit cards and business loans, you’ll need at least 10-20 seasoned tradelines.

How Does a Company Become More Creditworthy?

You’ll start by “bulking-up” your company’s credit with low-hanging credit accounts, first.   They don’t require much/any business credit history and they’re easy to get.

Then, you’ll move on to the next tier, and so on…

After 3-6 months, you should have $10,000 to $50,000 more business credit, and you’ll be poised to ride the coming business lending windfall.

In my course, I walk you through each and every step of establishing, getting and building business credit – no matter if your business is new or well-established.   I reveal which lenders you should apply for credit with at each stage to dramatically boost your approvals.

If you want to qualify for business loans and financing, now’s the time to act.   Click here to learn how you can get my complete course – dubbed “the new playbook of business credit” – right now on a risk-free basis…