Written by Janet Gershen-Siegel

No Winning Business Strategy is Complete Without Our Quarter Spot Review

Quarter Spot is one of several online lending companies. They offer short term business loans. We look at the specifics and drill down into the details. The lender confirmed the information in our Quarter Spot review.

Background

Quarter Spot is located online here: https://www.quarterspot.com/. Their physical address is in New York, NY. You can call them at: (646) 650-5018. Their contact page is here: https://www.quarterspot.com/Home/About_Us#section-contact. You can email them at: support@quarterspot.com. They have been in business since 2013.

Short Term Loans

$50,000 – $150,000 is available from Quarter Spot. The terms run from 9 – 18 months. Your company needs to have annual revenue of $200,000 or more. You must have a personal FICO score of 550 or better. The minimal time your company must be in business is 12 months. You have to be able to show a minimum average bank balance of $20,000. You must show a minimum of $16,000 per month in sales.  The borrower must own at least 50% of the business. They will only do a soft credit check.

Fees

Their rates range from 25% – 40%. There is no fee to apply.

Advantages

Advantages are that the personal FICO score requirement for Quarter Spot is relatively low. In addition, the minimum average bank balance requirement is also fairly low. Furthermore, with only a soft credit check, the application will not adversely affect your personal credit scores.

Disadvantages

Disadvantages are that their maximum rates are quite high.

Takeaways

Companies that will do best with Quarter Spot are those where the borrower has less than stellar personal credit but the company itself is already thriving and has been in business for a year or more. Because Quarter Spot requires that the borrower has to own at least half of the business, it positions itself as being ideal for sole proprietors and partnerships.

Quarter Spot will also work well for companies where the business can pay off its debts very quickly – as in before they are due. For companies where early payments are just plain not going to be possible, Quarter Spot’s high rates effectively cancel out virtually any benefits of using them. For such companies, there are other online lenders which might be better – or building business credit or getting unsecured business financing or even 401(k) financing would probably be better options.

A Word to the Wise

And finally, as with every other lending program, whether online or offline, always be sure to remember to read the fine print and do the math. Go over the details with care, and decide if 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.

Business Credit Building

An excellent alternative to online lending is business credit. You can build business credit fast and not have to worry about quickly paying off an online lender.

Business credit is credit in a small business’s name. It isn’t tied to a business owner’s personal credit, not even if the owner is a sole proprietor and the solitary employee of the company. Thus, an entrepreneur’s business and consumer credit scores can be very different.

The Advantages

Considering that business credit is distinct from personal, it helps to secure a business owner’s personal assets, in the event of litigation or business insolvency. Also, with two separate credit scores, a small business owner can get two different cards from the same merchant. This effectively doubles buying power.

Another benefit is that even startups can do this. Going to a bank for a business loan can be a recipe for frustration. But building small business credit, when done the right way, is a plan for success.

Consumer credit scores are dependent on payments but also additional components like credit use percentages. But for small business credit, the scores actually merely hinge on if a business pays its bills punctually.

The Process

Growing Business Credit is a process, and it does not happen without effort. A small business needs to actively work to build corporate credit. That being said, it can be accomplished readily and quickly, and it is much quicker than establishing individual credit scores. Merchants are a big component of this process.

Performing the steps out of sequence will lead to repeated denials. Nobody can start at the top with company credit. For instance, you can’t start with store or cash credit from your bank. If you do you’ll be rejected 100% of the time.

Business Legitimacy

A small business needs to be legit to lending institutions and merchants. Therefore, a corporation will need a professional-looking web site and e-mail address, with website hosting purchased from a company like GoDaddy. Also company telephone and fax numbers must be listed on ListYourself.net.

Also the business phone number should be toll-free (800 exchange or the equivalent).

A small business will also need a bank account devoted solely to it, and it needs to have every one of the licenses necessary for operation. These licenses all have to be in the correct, accurate name of the business, with the same corporate address and phone numbers. Bear in mind that this means not just state licenses, but possibly also city licenses.

Working with the Internal Revenue Service

Visit the IRS web site and get an EIN for the company – they’re free of charge. Pick a business entity such as corporation, LLC, etc. A small business can begin as a sole proprietor but will most likely wish to switch to a kind of corporation or partnership to limit risk and make best use of tax benefits.

A business entity will matter when it pertains to taxes and liability in the event of a lawsuit. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. No one else is responsible.

If you operate a corporation as a sole proprietor at least file for DBA (‘doing business as’) status. If you do not, then your personal name is the same as the small business name. As a result, you can end up being personally responsible for all small business financial obligations.

And also, according to the Internal Revenue Service, with this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 probability for incorporated businesses! Avoid confusion and substantially reduce the chances of an Internal Revenue Service audit simultaneously.

Setting off the Business Credit Reporting Process

Start at the D&B web site and get a cost-free DUNS number. A DUNS number is how D&B gets a business into 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 business. You can do this here. If there is a record with them, check it for accuracy 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 something to report on.

Trade Lines

First you must establish trade lines that report. This is also known as vendor credit. 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 obtaining revolving store and cash credit.

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

But first off, what is trade credit? These trade lines are creditors who will give you initial credit when you have none now. Terms are normally Net 30, instead of revolving. So if you get an 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.

Details

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

To start your business credit profile properly, you should get approval for vendor accounts that report to the business credit reporting bureaus. When that’s done, you can then use the credit, repay what you used, and the account is reported to Dun & Bradstreet, Experian, or Equifax.

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

You want 5 – 8 of these to move onto the next step, which is revolving store credit. Also, you may have to apply more than one time to these vendors, and you may have to purchase some items you don’t really need, to prove you are responsible and will pay timely. Consider contributing nonessential items to charity.

Uline Shipping Supplies

Uline Shipping Supplies is a true starter vendor. Find them online here. They sell shipping, packing, and industrial supplies, and they report to D&B.

You have to have a DUNS number. They will ask for 2 references and a bank reference. The first few orders might need to be paid in advance to first get approval for Net 30 terms. You may need to buy some items you don’t need.

Quill Office Supplies

Quill Office Supplies is an additional true starter vendor. Find them online here. They sell office, packaging, and cleaning supplies, and they report to D&B and Experian.

Because Quill reports to two separate credit reporting bureaus, you get two credit experiences with them. Place an initial order first unless the D&B score is developed. Commonly they’ll put you on a 90 day prepayment schedule. If you order items each month for 3 months, they will ordinarily approve you for a Net 30 Account.

Grainger Industrial Supply

Grainger Industrial Supply is also a true starter vendor. Find them online here. They sell safety equipment, plumbing supplies, and more, and they report to D&B. You will need a business license, EIN, and a DUNS number. For less than $1000 credit limit they will approve almost anybody with a business license.

Accounts That Don’t Report

Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to at the very least one of the CRAs, a trade account which does not report can still be of some value. You can always ask non-reporting accounts for trade references. And also credit accounts of any sort ought to help you to better even out business expenditures, thereby making financial planning easier. These are companies like PayPal Credit, T-Mobile, and Best Buy.

Revolving Store Credit

Once there are 5 – 8 or more vendor trade accounts reporting to at least one of the CRAs, progress to revolving store credit. These are companies which include Office Depot and Staples. These companies are likelier to have products you need. Use the small business’s EIN on these credit applications.

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

Fleet Credit

Are there 8 – 10 accounts reporting? Then progress to fleet credit. These are companies such as BP and Conoco. Use this credit to purchase, repair, and take care of vehicles. Make certain to apply using the corporation’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 more and a 411 business phone listing. Shell might say they want a specific amount of time in business or profits – but if you already have sufficient trade lines, that won’t be required and you can still get approval.

Cash Credit

Have you been responsibly managing the credit you’ve gotten up to this point? Then move onto cash credit. These are businesses such as Visa and MasterCard. Keep your SSN off these applications; 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; 10 trade lines reporting on your D&B report; and a $10,000 high credit limit reporting on D&B report (other account reporting). Plus they want you to have an established small 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 doable.

Monitor Your Business Credit

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

We can help you monitor business credit at Experian and D&B for only $24/month. Update the info if there are mistakes or the info is incomplete.

Contesting Problems

What’s all this monitoring for? It’s to challenge any errors in your records. Mistakes in your credit report(s) can be taken care of. But the CRAs typically want you to dispute in a particular way.

Disputing credit report mistakes normally means you send a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always send copies and keep the originals.

Disputing credit report errors also means you precisely spell out 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.

Quarter Spot Review: Caveats

Always use credit responsibly! Don’t borrow more than what you can pay off. Monitor balances and deadlines for repayments. Paying off punctually and fully will do more to increase business credit scores than almost anything else.

Growing small business credit pays. Good business credit scores help a company get loans. Your creditor knows the business can pay its debts. They know the small business is for real. The small business’s EIN attaches to high scores, and lenders won’t feel the need to demand a personal guarantee. Can you still work with Quarter Spot? Sure you can. But with business credit, you won’t need to.

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