Updated: Feb 4, 2022
Small businesses open new accounts and get approvals for commercial credit every day. So does it really matter if you have D&B scores and ratings in place before you apply? I guess that depends on whether you are content with the approvals you're getting, or if you would rather get exactly what you asked for!
But let's ask Larry and Lonnie and see what they say...
Larry ... has been a client for about five months. He has a six-year-old real estate investment company where he purchases, renovates, and then rents multi-unit properties.
When he first started with Starpoint, Larry's D&B report had minimal data about his company and a couple of payments, but his scores and ratings had never been fully established. The phone number in his D&B report was old and out-dated, which meant D&B's attempts to reach him to refresh company information had been fruitless. For that reason alone, D&B was withholding his scores and ratings, which kept his existing payment history from automatically flowing into the report.
That's not to say Larry hadn't been successful at achieving approvals, though. In fact, he had applied for credit in the past and had opened new accounts and credit cards along the way, but the approvals were minimal, and he found he was always forced to personally guarantee them. That sometimes weighed down his personal FICO score. And on the rare occasion that he applied for a business loan, he grew more and more frustrated with every denial.
We went to work updating the data in his D&B credit profile and his scores and ratings were immediately established. We were then able to add some of his existing payment history and opened new accounts with auto-reporters, and now those payments are flowing in like clockwork.
We also applied for a couple of new credit cards in the business name, received approvals, and transferred the business expenses off the personal credit cards and onto the business cards. That helped to improve his personal FICO score by eliminating that debt, and also helped boost his company's viability and creditworthiness when those transactions showed up in the D&B file.
But on Monday, as part of my normal daily monitoring of his report, I noticed a new inquiry had appeared in his D&B report. I sent him the usual notification about the inquiry and asked if he knew who that might be associated to (since I track that data very closely) and immediately received a very excited callback.
"Sorry," he said. "I was going to call you about that this morning but I got busy. I applied for a short-term business loan over the weekend and immediately got approved for $25,000, exactly what I asked for! I can't believe it!"
Lonnie ... on the other hand, was one of Starpoint's first clients and has been with me for nearly five years. Way back when he first started, we had updated his file and added payment history. After about six months, we switched him to a low-cost annual service so I can monitor and maintain his file as needed. These days, my work on his file consists of daily monitoring and adding a vendor or disputing a rare slow payment as needed.
By and large, Lonnie can get just about anything his company needs at this point. His company has been approved for several small business loans and one significantly large SBA loan.
But about two weeks ago, Lonnie reached out asking about small business lenders. He said he and his partner are in the process of launching a new project. They had already invested their own money, but they still needed about $100k to cover the remaining expenses, such as marketing, hiring additional personnel, and buying more computers and work spaces.
I recommended a couple of small business lenders and helped him apply for a short-term working capital loan, but I also suggested that he contact his existing merchant provider or bank since they are already familiar with his income, expenses, and capability.
The working capital loan (which doesn't pull the D&B file or report payment history to D&B) was approved for $35,000. But the two partners had a better offer from their merchant provider, who approved Lonnie and his partner for $120,000 — 20% more than they asked for — and enough to get their new venture off the ground.
"I was amazed when the approval came back offering $120,000, which was 20% more than we applied for," he said. "Thanks for watching out for us. It was a lot easier than I could have imagined, and faster than a traditional loan. The money is already in our bank!"
So the answer is "no" ... Full D&B scores and ratings are not a requirement to get business credit approvals, but — when you do — it can make all the difference in the world.
Give me a call if you need to get onto a path to business funding. If you have a D&B file already, I'll complete a free assessment and give you straight answers to help your business move forward, even if that means you do so on your own. If you need to get a new D&B DUNS number set up for your company, I can walk you through the process at no charge.
It's better that you start off on the right path than not at all... or worse... on a path that gets you nowhere fast.