A Rock-Solid Look at CAN Capital

CAN Capital (CC) is one of many online lending companies. They offer working capital and small business loans. We look at the specifics and drill down into the details about CAN Capital. CAN Capital had every chance to communicate with us about our eye-opening review.

Background

CAN Capital (CC) is online here: https://www.cancapital.com/. Their physical addresses are in New York, NY; Kennesaw, Georgia; and also San José, Costa Rica. You can call them at: (877) 550-4731.

Their contact page is here: https://www.cancapital.com/contact-us/. They have been in business since 1998. So this is far longer than a lot of the other players in the online lending space.

With no listed APR, a comparison tool will have to do. See: https://www.supermoney.com/reviews/business-loan.

Term Loans (Small Business Funding)

Funds are sent in days. CAN Capital wants daily fixed payments with automatic withdrawals. The funding is $2,500 – 150,000 per location. Their terms are 6 – 18 months. There is no personal collateral required.

Minimum annual revenue seems to be $54,000, according to: https://www.supermoney.com/reviews/business-loan. It also (per that link) appears to be that the minimum required personal FICO score is 640. So there is a four year minimal time in business requirement as well.

Fees

A CAN Capital term loan comes with a 3% origination fee. In addition, CAN Capital will offer a prepayment discount but only during the first 90 days after the term for the loan starts. APR is not listed but is calculated by Super Money as ranging from 16% to 70%.

Merchant Capital Advances

Funds are sent to you in days. Also, funding works out $2,500 – 150,000 per location. There are variable daily payments and there is no maturity date.

Fees

A CAN Capital merchant capital advance comes with a $395 administrative fee.

Advantages

Advantages include no prepayment penalty. In fact, there is a prepayment discount. The funding is provided quickly and with no personal collateral requirement. Plus this online lender’s experience provides an assurance that the company, or some form thereof, will be around tomorrow.

Disadvantages

Disadvantages include administrative and origination fees. Variable daily payments for merchant capital advances mean that budgeting becomes that much more difficult.

APR is not listed for term loans. But it is here: https://www.supermoney.com/reviews/business-loan. Per that site, the APR runs from 16% – 70%. Therefore if Super Money is correct, then the APR at CAN Capital is outrageously high.

CAN Capital, on Balance

Companies will do best with CAN Capital if they can pay their debts off early. Therefore not only will they not get a prepayment penalty, they will also, potentially, avoid the worst APR.

CAN Capital’s time in business may also be a factor. This is particularly at issue if you have business partners or a Board of Directors who are skeptical of online lending. With its two decades in the business, CAN Capital’s experience should help to alleviate those sorts of objections.

But for companies expecting payments later, there are issues.

CAN Capital’s fees and exorbitant maximum APR – and the fact that they make it very hard to calculate the latter – should give borrowers pause. Business owners would do better with unsecured business loans or building business credit.

Or they might do better with crowdfunding or angel investing, versus using this particular online lender.

Building Business Credit

Of course one of the best ways to fund your business is to build business credit!

Every company needs business credit. It is credit in a company’s name. It doesn’t attach to a business owner’s individual credit, not even when the owner is a sole proprietor and the sole employee of the company.

Thus, an entrepreneur’s business and personal credit scores can be very different.

Business credit is an asset which can help your company for many years to come.

The Benefits

Considering that business credit is distinct from consumer, it helps to safeguard a small business owner’s personal assets, in case of litigation or business bankruptcy. Also, with two separate credit scores, an entrepreneur can get two different cards from the same merchant.

This effectively doubles purchasing power.

Another benefit is that even startup ventures can do this. Visiting a bank for a business loan can be a formula for disappointment. But building corporate credit, when done correctly, is a plan for success.

Personal credit scores rely on payments but also additional factors like credit utilization percentages. But for corporate credit, the scores actually just depend on if a business pays its invoices on time.

The Process

Growing corporate credit is a process, and it does not happen without effort. A company needs to actively work to develop business credit. That being said, it can be done readily and quickly, and it is much faster than establishing consumer credit scores.

Merchants are a big part of this process.

Performing the steps out of sequence will lead to repetitive rejections. Nobody can start at the top with small business credit. For example, you can’t start with store or cash credit from your bank. If you do you’ll get a rejection 100% of the time.

Small Business Legitimacy

A company needs to be genuine to loan providers and vendors. As a result, a business will need a professional-looking website and email address, with website hosting bought from a merchant such as GoDaddy.

Plus company phone and fax numbers must have a listing on ListYourself.net.

At the same time the company phone number should be toll-free (800 exchange or the like).

A corporation will also need a bank account devoted solely to it, and it must have all of the licenses necessary for running. These licenses all must be in the exact, correct name of the small business, with the same business address and phone numbers.

So note that this means not just state licenses, but potentially also city licenses.

Dealing with the IRS

Visit the Internal Revenue Service website and get an EIN for the company. They’re free of charge. Select a business entity such as corporation, LLC, etc.

A business can begin as a sole proprietor. But they will most likely wish to change to a type of corporation or partnership to reduce risk and optimize tax benefits.

A business entity will matter when it concerns tax obligations and liability in case of a lawsuit. A sole proprietorship means the owner is it when it comes to liability and tax obligations. Nobody else is responsible.

Sole Proprietors Take Note

If you operate a small business as a sole proprietor, then at least be sure to file for a DBA (‘doing business as’) status.

If you do not, then your personal name is the same as the business name. As a result, you can wind up being directly accountable for all small business financial obligations.

Also, according to the IRS, by having this structure there is a 1 in 7 chance of an IRS audit. There is a 1 in 50 possibility for corporations! Prevent confusion and considerably reduce the odds of an IRS audit at the same time.

Kicking Off the Business Credit Reporting Process

Begin at the D&B website and get a free DUNS number. A DUNS number is how D&B gets a company in their system, to produce a PAYDEX score. If there is no DUNS number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the company. You can do this at https://oldcs.creditsuite.com/reports/. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

By doing so, Experian and Equifax will have activity to report on.

Vendor Credit Tier

First you should establish trade lines that report. This is also referred to as the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start obtaining retail store and cash credit.

These types of accounts tend to be for the things bought all the time, like coffee, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first of all, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are normally Net 30, rather than revolving.

Hence if you get approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, such as within 30 days on a Net 30 account.

Details

Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid completely within 60 days. In comparison with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To start your business credit profile the proper way, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. Once that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Helps

Not every vendor can help like true starter credit can. These are merchants that will grant an approval with hardly any effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

But you may have to apply more than one time to these vendors, and you may have to purchase some items you do not really need, to validate you are reliable and will pay in a timely manner. Consider giving unwanted things to charity.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then progress to the retail credit tier. These are service providers such as Office Depot and Staples. These companies are more likely to have goods you need.

Use the business’s EIN on these credit applications.

One instance is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a DUNS and a PAYDEX score of 78 or more.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move onto the fleet credit tier. These are businesses such as BP and Conoco. Use this credit to purchase, fix, and maintain vehicles. Make sure to apply using the corporation’s EIN.

Cash Credit Tier

Have you been sensibly handling the credit you’ve up to this point? Then progress to the cash credit tier. These are companies such as Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.

These are businesses like Walmart and Dell, and also Home Depot, BP, and Racetrac. These are normally MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.

Monitor Your Business Credit

Know what is happening with your credit. Make certain it is being reported and take care of any mistakes as soon as possible. Get in the practice of checking credit reports and digging into the details, and not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: https://oldcs.creditsuite.com/business-credit-monitoring. Update the details if there are inaccuracies or the details is incomplete.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any problems in your records. Errors in your credit report(s) can be taken care of. But the CRAs normally want you to dispute in a particular way.

Disputing credit report inaccuracies usually means you mail a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always mail copies and retain the originals.

Fixing credit report mistakes also means you precisely detail any charges you challenge. Make your dispute letter as crystal clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.

A Word about Business Credit Building

Always use credit smartly! Don’t borrow more than what you can pay back. Keep track of balances and deadlines for repayments. Paying on time and in full will do more to boost business credit scores than almost anything else.

Growing small business credit pays. Great business credit scores help a small business get loans. Your credit issuer knows the corporation can pay its financial obligations. They know the small business is for real.

The small business’s EIN attaches to high scores, and loan providers won’t feel the need to ask for a personal guarantee.

Do Your Homework

And finally, as with every other lending program, read the fine print and do the math. So go over the details carefully, and decide if this option will be good for you and your business. Also consider alternative financing options that go beyond lending, including building business credit, to best decide how to get the money you need to help your business grow. Check out how this will help your company decide how best to get financing.