Lendable Business Setup

Creating a Lendable Business Setup in 2023-10 Steps

by Alexandru Tanase Feb 23, 2023

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Table of Contents

  1. Why Is Your Business Structure Important? 
  2. Pay Attention to Your Company Name 
  3. Address Your Business Address
  4. Use your business phone number to make the appropriate call
  5. Enter Your EIN.
  6. Create an incorporated business entity
  7. Obtain a license
  8. Establish a Business Bank Account in the Name of the Business 
  9. Don't Undervalue the Value of a Business Web Domain and a Dedicated Website 
  10. Carefully choose your NAICS codes 
  11. Why is Risk Management Important?
  12. Credit Line Hybrid: Conditions and Eligibility 
  13. Setting Up a Business to Be Lendable 

The year has begun. These suggestions will help you ensure that your company is set up for success in 2023 and beyond, regardless of whether you have a new firm or have been operating one for a while. 

Why Is Your Business Structure Important? 

The viability of your firm depends on how it is organized. If it is not based on a lendable foundation, it cannot receive the best business loans. What exactly is bendability, and what constitutes a lendable foundation? 

Lendability refers to a company's present capacity to obtain financing. Of course, there are funding-related factors that you cannot control. However, you have a lot of elements under your control.

These are the things you should pay attention to.

Setup of the Business: A Lendable Foundation

Create a lendable foundation for your firm by following these steps. 

Step 1: Pay Attention to Your Company Name 

You may not realize how crucial this is. Much more than just naming something is involved. To start, find out if your Secretary of State mandates that a business name be unique. 

Then, avoid using any references to a regulated or high-risk industry in the name of your company. Instead of Rachel's Gas Station, your company can be Rachel's. This can aid in avoiding a lender's automatic or practically automatic denial due to the type of business. 

If your company is viewed as high risk right away, the application might not even make it to the underwriting stage.   

Step 2 : Address Your Business 

A physical location at which you can receive mail is part of the setup for a lendable business. Never use a P.O. Box or UPS box. In fact, if this isn't the case, some lenders won't authorize and fund the loan. You can use a virtual address if you don't want to use your home address. In fact, if you need to conduct a meeting or an interview, it's not a bad idea. Good choices include Regus, Davinci, and Alliance Virtual Offices. However, bear in mind that some lenders will not accept virtual addresses. 

Step 3: Use your business phone number to make the appropriate call. 

Toll-free phone numbers are ideal, as expected. They are viewed as an indication of corporate legitimacy by lenders. Setting up a virtual local phone or a toll-free number is quite simple and affordable. Simply get your company number transferred to your personal phone if you want to avoid having a separate phone. 

Additionally, for the majority of credit issuers and lenders to approve you, your business number must be listed with 411. To see if you are listed, search for your record. Make sure your information is accurate while you're at it. None exists? then obtain a listing by using ListYourself.net. 

Step 4: Enter Your EIN.

Get a free EIN for your company right now at IRS.gov. This is a unique number for your company. It resembles your unique Social Security number in certain ways. On all of your company paperwork, you'll use it. 

Create an incorporated business entity in Step 5 

In many situations, incorporating increases your credibility. It establishes the separation between your company and you, the owner. Naturally, incorporating lowers your personal liability by default. Other legal forms, such as partnerships and sole proprietorships, don't. 

Step 5: Obtain a license

To find out if you need any licenses or permits to run your particular type of business, get in touch with the State, County, and City Government departments. Depending on the state, the city, and the industry, different licenses are required. 

Always check to see if your company has the appropriate licenses. Your secretary of state most likely has this knowledge.   

Step 6: Establish a Business Bank Account in the Name of the Business 

You must have a distinct bank account for your business. Remember that the IRS requires you to keep your personal and corporate finances separate. A separate company account streamlines the procedure and lowers the possibility of an audit during tax season. 

More than that, before they will approve you for an account, many credit lenders want to see a business bank account. Additionally, lenders consider your business to have started on the day you opened your business bank account. 

It doesn't matter if your company was incorporated ten years ago as a result. In the viewpoint of loan grantors, your business officially began yesterday if you just opened the business bank account. The sooner you open a business bank account, the better, as practically all business credit accounts have a minimum time in business requirement. 

Obtaining a merchant account, which enables your company to accept credit cards, also requires having a commercial bank account. Studies have demonstrated for years that consumers spend more when using plastic than when using cash. 

Step 7 : Don't Undervalue the Value of a Business Web Domain and a Dedicated Website 

Lenders and credit providers are very likely to conduct web-based research on your company. As you may expect, it's better if they learn everything from your company's website immediately. Your prospects of obtaining business finance may suffer if your company has no website. However, keep in mind that a website that lacks professionalism can cause just as much harm. 

You must have a credible website. This means that it must contain relevant information for anyone who discovers your business online. It should also be professionally hosted. Invest in web hosting from a provider like GoDaddy or HostGator. A free hosting service like Weebly or Wix should be avoided. 

If at all possible, your domain name ought to be your company name. 

If at all possible, your domain name ought to be your company name. Free Wix or Weebly domains don't have a polished appearance. Compared to www.yourbusiness.wix.com, www.yourbusiness.com, for instance, presents a considerably more professional image.   

Additionally, your firm requires a company email address. What's this? The domain must match that of your website. It frequently includes a website domain registrar like GoDaddy. Use none of the free email services offered by Yahoo, AOL, Gmail, or Hotmail. Again, [email protected] doesn't seem nearly as professional as [email protected]

The Foundation and Beyond 

The next aspect of the business establishment to take into account is a risk after building a fundable basis. When it comes to fundraising, this isn't a problem at all for certain companies. 

Others, though, may find it challenging.  

Step 8: Carefully choose your NAICS codes 

Federal statistical agencies utilize the North American Industry Classification System (NAICS) as their benchmark. On the website of the IRS, you select your NAICS code.   

Every industry has problems that are inherent. However, some NAICS numbers are thought to be riskier than others for certain industries. No matter how well the company is doing, it is still regarded as a dangerous venture. Higher risk is typically caused by the potential for damage, a high frequency of cash transactions, or a low barrier to entry. 

NAICS codes are used by the IRS, lenders, banks, insurers, and business CRAs. They are attempting to assess whether your company falls within the category of a high-risk industry. A list of high-risk and high-reward industries is published by the NAICS. The NAICS list is outdated and hasn't been updated in years, but higher-risk industries include casinos, pawn shops, and booze stores. 

Why is Risk Management Important?

Risk is a major consideration when seeking investment. Lending banks are reluctant to do business in a number of sectors. There are tighter underwriting requirements in such specific situations. Some industries, however, are immediately rejected because they are thought to be too dangerous.

These companies are now forced to hunt for alternative sources for their best funding solutions

These may consist of:

  • Crowdfunding 
  • Angel backers 
  • Venture funding 
  • growing business credit and more 
  • Changes to the NAICS Code 

Of course, while choosing your NAICS code, you want to be absolutely truthful. However, if more than one application can be chosen, you are not required to choose the one with the highest risk. When choosing, it helps to do your research and use caution. Consider the best naics code for funding. 

There is absolutely nothing wrong with modifying your company to correspond with a similar but low risk business naics code if only high-risk codes apply. 

Tenth step: Be dependable! 

Inconsistent business information is a major factor in the denial of many credit and loan applications. This makes it challenging for the lender to find a company, both offline and online. 

Tenth step: Be dependable! 

Inconsistent business information is a major factor in the denial of many credit and loan applications. This makes it challenging for the lender to find a company, both offline and online. Additionally, it raises suspicions of fraud in the minds of individuals making lending judgments.  

Make sure your company name and other information are consistent throughout to prevent this. This contains, among other things, documents relating to incorporation, licenses, utility statements, and bank statements. 

If the name of your company changes, make sure to update it everywhere.

This means that, among other places, you alter it as follows: 

  • Your 411 listing on your website 
  • Your filings with the commercial CRAs (D&B, Experian, and Equifax) Initial Financing Options 
  • You will require financial assistance when you start up your firm. You'll need to look into alternate choices if your company's setup isn't presently fundable. The Credit Suite Credit Line Hybrid is a fantastic option.   

    Credit Hybrid Line 

A hybrid credit line is a type of unsecured loan. Our hybrid credit line offers an interest rate that is significantly lower than a secured loan. With a stated income, you can obtain 0% APR business credit cards, and many of them issue report to business CRAs. That implies that you can simultaneously establish commercial credit. 

By doing this, you will gain access to additional funds without any personal guarantee.  

Credit Line Hybrid: Conditions and Eligibility 

A credit score of at least 700 is required, either for yourself or a guarantor. Financials are not necessary, and you can frequently earn up to $150,000. You should be aware that some credit cards may report to your personal credit.

Setting Up a Business to Be Lendable 

In all honesty, you need a lendable foundation before you can construct a lendable business. This is the main goal of the business setup. Don't overlook the foundation, because it is the basis for all other aspects of bendability. Never skip it. If you need to go backward to make this happen while your firm is still running, do it right now. Better yet, sooner. 

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