Over the years, we have assisted many clients through the process of applying for credit. Along with lots of approvals, there have been some who were declined. When navigating the reasons for denials, we’ve found a few that seem to stand out, possibly because they seem so trivial.
We want to make sure business owners understand how some of the smallest details can cause the biggest headaches when your company is applying for business credit.
15 Most-Common Reasons Applications Fail
1. Incorrect or incomplete company name, address, or contact info The name, address, and phone must be exactly as in the business credit file. Be sure to include the Inc, Corp, or LLC on your business name. Contact information should reflect for the business, not you personally.
2. Providing an EIN or DUNS number in the SSN slot If the application requires your SSN, you need to provide it. A social security number is used to validate the applier’s identity. Only use the EIN number if the application has a specific slot for it. Only use a DUNS number if there is a specific slot requesting it. Using any other number in the SSN slot could constitute fraud or identity theft.
3. Applying under a name not shown in the business credit file Only listed owners or officers are eligible to submit credit applications. Do not allow anyone outside your business to apply in your name. It is dangerous to add principals to your file solely for credit purposes.
4. Refusing to agree to personally guarantee Agreeing to personal guarantee does not mean a PG will be required. Underwriters may require a guarantor if business credit is insufficient. Many underwriters require a guarantor for very young businesses. Business credit is not the same as personal credit in the business name.
5. Misrepresenting corporate data Don’t misrepresent or inflate your annual income. Don’t represent personal income as business income. Misrepresenting any corporate data to achieve credit constitutes fraud.