As you may know, a business credit check is standard operating procedure when applying for any kind of business loan.
However, you may not know that in some cases, simply applying for a business loan can severely hurt your business credit score. How is this possible – and more importantly, how can you avoid this damage? We address both of these below.
How Loan Brokers Operate
Loan brokers – sometimes called loan consultants or loan coordinators – take loan applications and shop them around to lenders nationwide. Their selling point is often that they feel this process is smart and strategic, because it allows them to identify the best rates and terms.
But what they typically don’t tell their clients, is that each of these potential lenders may conduct a business credit check on the applicant. So if there are 10 potential lenders involved, that means 10 independent credit checks all happening around the same time – and possibly on the same day!
How to Avoid this Scenario
As you might expect, all of the credit bureaus find multiple credit checks alarming. Credit agencies often allow for you to get multiple inquiries concurrently within a specific time without setting off any alarms or major dings to your credit, so make sure to consider this before you have them run your application.
Alternatively, you may choose to avoid going the way of loan brokers so that you are dealing directly with the company that will supply your loan. This way, you can be assured that your application won’t be shopped around from lender to lender – and your business credit score won’t be unfairly damaged in the process.
In addition to preserving your business credit score, another welcome advantage to steering clear of loan brokers is that you won’t pay any additional broker fees, sometimes noted as “application fees” or “professional service costs”.
What’s more, having a direct relationship with a provider of funding vs. dealing with a loan broker (a.k.a. middleman) allows you to ask questions, get answers, and confirm that you’re comfortable and confident about moving forward. It also means that you’ll have a personal relationship to rely on after your loan is approved (i.e. if you want to increase the amount of funding, etc.).
At Mulligan Funding, we proudly provide funding for 100 percent of our loans, and while we perform a standard business credit check, this only happens once – which, again, is standard operating procedure. Plus, we look at other factors besides credit scores when approving applications (i.e. bad credit is typically not an obstacle), and we NEVER charge application fees of any kind.
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!
*The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 22, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.