Everything You Need to Know About LenCred – Don’t Be Afraid to Ask!

LenCred is one of several  lending companies in the online space. They are based in Blackwood, NJ and Bentonville, AR.

They serve as a small business loan broker, mainly to startup companies and newer businesses. LenCred works with companies which need from $25,000 – $200,000 in financing. There are no revenue requirements; the companies which work with them tend to have $0 – $250,000 in annual revenues. Their most popular form of financing is unsecured financing. We look at the specifics and drill down into the details.

Background

LenCred is located online here: https://lencred.com/. Their physical addresses are in Bentonville, Arkansas and Blackwood, New Jersey. You can call them at: (479) 268-4353 (Arkansas) and (856) 302-6487 (New Jersey).  Their contact page is here: https://lencred.com/contact/. You can email them at: info@lencred.com.

Unsecured Business Credit Lines

There is a $50,000 guaranteed minimum for a line. You can get $25,000 – 100,000 in the first 30 days. However, you will be denied if you have a consumer credit utilization rate of over 30%.

Fees

They have a 0% introductory rate.

SBA Loans

They do not obtain SBA Loans or give them out. Rather, they can help companies apply for these.

Equipment Financing

$1,000 – $5 million is available in funding through this lender. They will help you get equipment financing. However, they do not seem to actually provide it.

ACH/MCA Financing

Online lender LenCred offers 2 to 10 year repayment terms. You need to have $10,000 or more in monthly revenues if you have bad credit. Your business can get up to $50,000. They can also facilitate Factoring and IRA/401(k) Financing.

Fees

There is an origination fee of 8%, which is capped at $5,000.

Find out why so many companies are using our proven methods to improve their business credit scores.

 Advantages

Advantages are that unsecured business funding is often a great way for startups to get the money they need, and they do not seem to have an annual revenue requirement unless you have bad personal credit. There is also the matter of the 0% introductory rate. This particular lender also seems to be flexible when it comes to borrowers with less than stellar credit.

Disadvantages

The biggest disadvantage is that the time to funding is slower compared to a number of other lenders in the online space. Another disadvantage is that entrepreneurs who have been relying on their personal credit cards to fund their businesses are probably going to have too high a credit utilization rate to qualify for LenCred’s offerings.

A Terrific Alternative – Establishing Business Credit

This is credit in a business’s name. It doesn’t link to an entrepreneur’s consumer credit, not even if the owner is a sole proprietor and the solitary employee of the small business.

Accordingly, a business owner’s business and individual credit scores can be very different.

The Advantages

Since company credit is distinct from personal, it helps to protect a business owner’s personal assets, in the event of legal action or business bankruptcy.

Also, with two separate credit scores, a small business owner can get two different cards from the same vendor. This effectively doubles buying power.

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

Personal credit scores rely on payments but also other elements like credit usage percentages.

But for small business credit, the scores really merely depend on if a company pays its debts on time.

The Process

Establishing business credit is a process, and it does not occur without effort. A business has to actively work to develop company credit.

That being said, it can be done easily and quickly, and it is much swifter than establishing personal credit scores.

Merchants are a big aspect of this process.

Undertaking the steps out of order will cause repetitive denials. Nobody can start at the top with small business credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.

Business Fundability

A business needs to be fundable to loan providers and vendors.

That’s why, a company will need a professional-looking web site and e-mail address. And it needs to have site hosting from a company like GoDaddy.

And also, business phone and fax numbers need to have a listing on ListYourself.net.

Additionally, the business phone number should be toll-free (800 exchange or similar).

A small business will also need a bank account dedicated strictly to it, and it needs to have every one of the licenses necessary for operating.

Licenses

These licenses all have to be in the perfect, correct name of the business. And they need to have the same company address and phone numbers.

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

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Working with the Internal Revenue Service

Visit the Internal Revenue Service website and obtain an EIN for the small business. They’re totally free. Choose a business entity like corporation, LLC, etc.

A company can begin as a sole proprietor. But they will more than likely want to change to a variety of corporation or an LLC.

This is in order to decrease risk. And it will make best use of tax benefits.

A business entity will matter when it involves taxes and liability in the event of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. Nobody else is responsible.

Sole Proprietors Take Note

If you run a small business as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the small business name. Hence, you can find yourself being personally liable for all company financial obligations.

And also, per the IRS, by having this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 probability for corporations! Avoid confusion and noticeably lower the odds of an Internal Revenue Service audit as well.

Starting Off the Business Credit Reporting Process

Start at the D&B web site and obtain a free D-U-N-S number. A D-U-N-S number is how D&B gets a business in their system, to produce a PAYDEX score. If there is no D-U-N-S 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 fastcs.wpengine.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 this, 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 begin to obtain credit in the retail and cash credit tiers.

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

But to start with, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are ordinarily Net 30, instead of 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, like within 30 days on a Net 30 account.

Find out why so many companies are using our proven methods to improve their business credit scores.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to the retail credit tier. These are businesses which include Office Depot and Staples.

Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the small business’s EIN on these credit applications.

One good example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or better.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move to the fleet credit tier. These are companies such as BP and Conoco. Use this credit to buy fuel, and to repair, and take care of vehicles. Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the small business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or higher and a 411 company phone listing.

Shell might say they want a certain amount of time in business or profits. But if you already have adequate vendor accounts, that won’t be necessary. And you can still get approval.

Cash Credit Tier

Have you been responsibly handling the credit you’ve up to this point? Then move to the cash credit tier. These are service providers like Visa and MasterCard. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or more. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Additionally, they want you to have an established business.

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

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and attend to any inaccuracies ASAP. 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 only $24/month. See: fastcs.wpengine.com/monitoring.

Update Your Information

Update the information if there are errors or the information is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. And for Equifax, go here: www.equifax.com/business/small-business.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to contest any mistakes in your records. Mistakes in your credit report(s) can be corrected. But the CRAs generally want you to dispute in a particular way.

Disputes

Disputing credit report mistakes generally means you mail a paper letter with duplicates 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 inaccuracies also means you specifically itemize any charges you dispute. Make your dispute letter as crystal clear as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you mailed in your dispute.

A Word about Business Credit Building

Always use credit smartly! Never borrow beyond what you can pay off. Monitor balances and deadlines for repayments. Paying off punctually and completely will do more to raise business credit scores than just about anything else.

Building small business credit pays off. Good business credit scores help a small business get loans. Your lender knows the business can pay its financial obligations. They understand the business is bona fide.

The small business’s EIN attaches to high scores and lenders won’t feel the need to require a personal guarantee.

Business credit is an asset which can help your small business for years to come. Learn more here and get started toward growing small business credit.

Upshot

The companies which will most likely do well with LenCred need financing but can afford to wait a month. Companies which will not do well are those where the entrepreneur has been relying too heavily on personal credit, thereby driving up their credit utilization rate. The monthly revenue requirement is high – a company just getting on its feet is not going to qualify.

And finally, as with every other lending program, whether online or offline, remember to read the fine print and do the math. Go over the details with a fine-toothed comb, and decide whether this option will be good for you and your company. In addition, consider alternative financing options that go beyond lending, including building business credit, in order to best decide how to get the money you need to help your business grow.