Where Does Your Credit Fall?

Your credit rating reveals your ability and willingness as a business entity to fulfill financial obligations within the established due dates. This will also indicate if you are more likely to default on a business loan. Many traditional and non-traditional lenders in Michigan may review your credit rating before reviewing your loan application. Ultimately, lenders use your credit rating to determine how much a risk they are putting on your business's success.

A credit score generally falls between a 300 to 850 range. The higher the credit score, the more likely your Michigan business will receive funding as it shows you're a lower financial risk and can make on-time payments.

What affects Your Credit?

Five general factors make up the rating of your credit. By understanding these factors, you can control and ultimately improve your score.

• Recent Activity (10%): When you apply for new lines of credit, loans, or other financing options, generally, you endure a “hard check” to review your credit. Each hard check and newly opened account are considered when applying for a new financing option.

• Credit Usage (30%): This factor reveals how many of your credit lines have balances. The amount owed is taken into consideration, and the credit limits of each line.

• Length of Credit History (15%): This category reveals the average age of all your accounts. Generally, the longer your credit history, the higher the score.

• Credit Mix (10%): A credit mix reveals the types of accounts you may have. It will tell if you have a car loan, credit card, student loan, mortgage, or other credit products. This portfolio of accounts will show financial entities how well you manage a wide range of credit products.

• Payment History (35%): This is one of the more critical factors in the makeup of your credit score. Being on time and ensuring not one payment is missed will show Michigan lenders you can pay on time.

Denied by Traditional Lenders?

You can still get a small business loan if you have bad credit. While a credit check plays a significant role in the process, there are still ways you can get funding with bad credit. You are not the only one you've tried your hand with traditional lenders and received rejections.

For many companies in Michigan, traditional financial institutions like credit unions and banks often have stringent requirements for their business loan programs. Almost 90% of smaller companies with lower credit scores will get rejected for a loan upon applying at the bank.

At First Union Lending, credit scores are not the end-all to your funding application. We review all aspects of your application and work much more expediently when funding small and growing businesses in need.

Financing Options

Business Line of Credit

A line of credit is a credit facility extended by a financial entity to a qualified business ownernin Michigan to address fluctuating cash flow needs. When a line of credit is opened, the business receives access to a stated amount of funds to use as needed. A monthly statement reflecting the amount of credit used will include an interest charge determined before the account opening.

Merchant Cash Advance:

A merchant cash advance is an alternative financing option where a borrower receives an upfront sum of cash in exchange for a portion of future business sales. It is the perfect option for businesses that often deal with credit card sales. The MCA provider analyzes your revenue to determine how much money to provide, and payments are taken out of your future sales.

Short-Term Business Loan:

A short-term business loan provides a lump sum of funding upfront to a borrower and is given a repayment period ranging from three months to eighteen months to three years. The shorter repayment period makes this loan a better financing option to cover immediate cash flow gaps or emergency expenses.

Invoice Financing:

This financing option uses your business's account receivables to get the funds you need. If you have reliable customers with a history of on-time payments, the lender will offer a cash advance on outstanding invoices. Borrowers can receive about 75-80% of the value of the debt upfront.

Equipment Financing:

If you're looking to purchase equipment, this is a good option for those with poor credit. Michigan based lenders will likely overlook your score as the kit will serve as collateral for the loan. To secure this type of loan, you'll need to provide a quote to your lender showing the total cost. Once approved, you'll receive the funding for your new equipment piece.

How To Apply for a Business Loan in Michigan

If traditional lenders have denied you too many times, it's time to work with a reliable alternative lender like First Union Lending to provide funds. We are here to help!

Submit your business information below to determine if you qualify for any of our available trim business financing options. Our Funding Specialists will analyze your qualifications and will reach out to walk you through the following steps.

While each available financing option has varying qualifications, prepare to provide the following information to our Funding Specialists.

• Business Operation History
• Business Revenue Statements
• Personal & Business Credit Scores
• Collateral if needed

In the past, loans for businesses with bad credit were harder to acquire due to their higher risk factors. First Union Lending offers flexible and quick funding to small and growing businesses to help them become successful.

How To Improve Your Credit

For better rates and special terms, one of the best things you can do for yourself is to fix your credit rating slowly. We care about our clients and their overall business success. To keep your business in good health and to prepare for future funding, we suggest the following tips to help raise your credit score:

Check Your Credit Score

There are two ways you can check your credit score to know if you are within good standing. You have access to free tools to help you see how your credit score changes over time. You can utilize credit monitoring services like Experian, which provides additional identity theft protection.

Create a Payment Schedule

Avoiding late payments is another great way to improve your credit score. It has the most significant impact on your rating; therefore, sticking to the payment schedule is ideal for increasing the score. Create reminders on your phone, create a filing system, or set up automatic payments from your business accounts to ensure bill payments are on time.

Lower Your Credit Utilization

Ideally, you will want to lower your outstanding balance to about 30% or less of your total credit limits. Keep your balances low by paying off the debt and maybe turning on a usage notification. Another way to lower your utilization is to increase your credit limit. Boosting your credit limit will only be helpful if you are still reducing your outstanding balance, not adding to it.

Don't Close Open Accounts

The overall age of your credit accounts can make you favorable to Michigan based lenders. If you have older, paid-off accounts, do not close them. While you have an outstanding balance on other lines, closing accounts would lower your credit rating and increase your credit utilization ratio.

Consolidating Your Debts

Debt consolidation is a loan taken from a lender and used to pay off all outstanding debt. You rid yourself of several payment lines and will focus on one balance to pay off. A debt consolidation loan can help you pay down debt faster and increase your credit score tremendously if appropriately utilized.

Choose First Union Lending

At First Union Lending, we believe that small and medium-sized businesses deserve the right to access the capital they need to succeed.

Our goal is to build long-term, lasting relationships by providing business owners with what they need when they need it. We pride ourselves on being educated, knowledgeable, and caring about how we conduct business. We have acquired much of the same licensing traditional banks require to cement our fiduciary responsibility to our clients and work culture.

We are here to consult, help you save, and guide you and your business to success.